Why Might People Refer to Student Loans as “Good Debt”?

Why Might People Refer to Student Loans as “Good Debt”?


When discussing debts, it is rare to hear the term “good debt.” However, there is an exception – student loans. While the idea of debt may initially seem negative, student loans are often viewed as an investment in one’s future. This perspective is rooted in several reasons that make people consider student loans as “good debt.” In this article, we will explore the factors that contribute to this viewpoint and address some frequently asked questions about student loans.

Factors That Make Student Loans “Good Debt”:

1. Education as an Investment:
Education is often viewed as an investment in oneself, leading to personal and professional growth. By taking out student loans, individuals are essentially investing in their future earning potential. Higher education generally leads to better job prospects and increased income over time, making it more likely that students will be able to repay their loans.

2. Affordable Interest Rates:
Compared to other forms of borrowing, student loans often come with lower interest rates. This makes them more manageable in the long run, as borrowers end up paying less in interest over time. Additionally, certain types of student loans, such as federal loans, offer flexible repayment plans and options for loan forgiveness, further easing the burden of repayment.

3. Potential Tax Benefits:
Interest paid on student loans is often tax-deductible, which can provide some relief when repaying the debt. This tax benefit can help reduce the overall cost of borrowing and make student loans more financially viable.

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4. Building Credit History:
Student loans provide an opportunity for individuals to establish and build their credit history. Responsible repayment can positively impact credit scores, making it easier to secure favorable terms on future loans, such as mortgages or car loans.

5. Investment in Human Capital:
Student loans are seen as an investment in one’s human capital – the skills, knowledge, and experience gained through education. Higher education equips individuals with the tools needed to excel in their chosen fields and contributes to societal progress. This investment has long-term benefits, both for the individual and society as a whole.

FAQs about Student Loans:

1. Are student loans always a good idea?
While student loans can be beneficial, it is essential to carefully consider the amount borrowed and the potential return on investment. It is crucial to research the job market and earning potential in one’s field of study before taking on significant debt.

2. Can student loans be discharged in bankruptcy?
Under most circumstances, it is challenging to discharge student loans through bankruptcy. However, in cases of extreme financial hardship, it may be possible to have student loans discharged through a process called “undue hardship.” This requires proving that repaying the loans would cause an undue burden on the borrower.

3. Are all student loans considered “good debt”?
While student loans are generally considered “good debt,” not all loans are created equal. Federal student loans often come with more favorable terms and repayment options, making them more manageable. Private loans, on the other hand, may have higher interest rates and fewer borrower protections.

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4. What happens if I cannot repay my student loans?
If you are struggling to repay your student loans, it is essential to communicate with your loan servicer. There may be options available, such as income-driven repayment plans or deferment/forbearance, to temporarily suspend or reduce your monthly payments. Defaulting on student loans can have severe consequences, including damage to your credit score and potential wage garnishment.


While debt is generally seen as a burden, student loans are often referred to as “good debt” due to the long-term benefits they offer. By investing in education, individuals increase their earning potential and open doors to better job opportunities. Affordable interest rates, potential tax benefits, and the ability to build credit history further contribute to this positive perception. However, it is crucial to approach student loans responsibly, considering the amount borrowed, potential return on investment, and exploring options for repayment assistance if needed.