How Student Loan Debt Could Damage Your CareerNovember 22, 2019
You just graduated from college and have student loan debt. No big deal right? Sixty-nine percent of 2019 graduates have student loan debt, so you are absolutely not alone. But did you know your student loan debt could damage your career? Read on to find out how and ways to prevent this from happening.
A majority of college graduates have student loan debt and if you don’t get a handle on yours, it could cause damage to your career before your career even begins. Here are some ways having student loan debt can damage your career:
Your Credit Report
Your credit report shows all of the credit cards you have and their balances and your debt payment history, including your student loans. Missing a payment on your student loans would negatively affect your credit history. Some employers conduct a credit check when you apply for a position. Although they cannot see your actual credit score, they can receive a modified credit report. According to a survey conducted by HR.com, 16% of human resource professionals conduct a credit or financial check on all job candidates and 31% conduct a check on some candidates. Credit checks are most frequently conducted in employment involving security clearance, in positions working with the money of the business or clients, and where confidential information is involved in the job.
Student loan default can affect whether you are able to obtain or renew a professional license. Student loan default is when you have missed multiple consecutive payments on your student loan. The professional licenses affected vary by state but can include licenses for healthcare workers, teaching licenses, lawyers, plumbers, and other professions. Although many states are moving away from this practice of denying someone’s professional license, it is still a practice in some states. So be sure to stay current on your payments!
In a survey conducted by American Student Assistance, 53% of respondents felt their student loan debt was a contributing factor or the main factor in deciding their career field. The average student loan debt in 2019 was $31,172 with an average payment of $393 per month. This amount of debt may cause a new graduate to seek employment outside of their chosen career field to be able to afford basic bills and their student loan payment. Allowing your student loan debt to change your career path could cause you to resent your job and, ultimately, not have as successful a career as you had planned.
No Additional Education
If you ever thought of going back to school for an additional degree to further your career, your student loan debt could hold you back. If you default on your student loans you will not be able to obtain additional loans. In addition, if you are graduating from college with student loan debt you may dread the thought of taking on more debt for graduate school and avoid it altogether. Putting off a graduate degree to avoid student loan debt can cause you to miss out on promotions in your career that may require an advanced degree.
If you have student loan debt you may be worried about making the payments or when you will ever be done paying it. Student loan debt can cause financial stress which causes distractions at work. A paper by the Center for Financial Services Innovation showed that 1 in 3 employees said that their finances caused distractions at work. If you are distracted at work this can lead to mistakes and low productivity.
How to Repair
Just because you have student loan debt, doesn’t mean it will definitely damage your career. The most important aspect to focus on is making timely payments. Here’s how to avoid student loans damaging your career:
- Refinance Student Loans: If you feel your student loans may be damaging your career or you are just looking to save some money, it may be beneficial to refinance your student loans. Refinancing can help you to avoid default by establishing a more manageable payment. Refinancing can also save you money in interest costs over the life of the loan. If you want to see how much refinancing can save you, check out our student loan refinance calculator.* When you refinance your student loans, you obtain a new loan to pay off your old student loan. Your new loan presumably has a lower interest rate and thus a lower monthly payment. To be able to refinance you must have a good credit history, so this option is best used before you have trouble making payments. Credit history is just one criterion to qualify for student loan refinancing.
- Payment Plans: If you have federal student loans with a high payment, check into an income-driven repayment plan. The required payment amount is based on your income. The Federal Student Aid site provides information on the various plans available. Although a payment plan based on your income will not save you money on the life of the loan, it can reduce your monthly payment.
- Already in Default? If you have defaulted on a federal student loan, you need to learn how you can get out of default. Once out of default your student loans may be less of a harm to your career.
You took out student loans to allow you to gain the education you needed for your dream career. Don’t let your student loan debt get in the way of that! Be mindful of how student loan debt can affect your career and research whether student loan refinancing would be beneficial for you.
*Subject to credit approval. Terms and conditions apply.
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