For many, higher education is seen as a stepping stone to career advancement, which in turn means higher earnings and personal development. This is why despite its high price, many believe that its merits outweigh the risks. In fact, many in Singapore take out loans from a Chinatown money lender or a lender close to them for this purpose.
But is it a wise decision? To help you decide, here are the pros and cons of taking out an educational loan for an advanced degree. .
Potentially Higher Earnings
The promise of higher wages in management and specialist positions is the prime motivator for most people who take out educational loans for advanced degrees.With such a salary, you will be able to recoup what you spend in loans.
This, however, depends on the industry you’re in. Some of them do not offer much in terms of salary growth. This may make the incurred debt not worth the investment, so the loan may not be worth it if the salary increase isn’t as high as you expect it to be.
Career opportunities
An advanced degree gives one a clear competitive advantage over others, making it worth the investment. There’s also the fact that certain positions require advanced qualifications. If one is offered to you but requires you to have an advanced degree, you can take out an educational loan for it. While you can pay for it out of pocket, it can be financially difficult to do so.
At the same time, due to the many changes in various industries brought about by technological and economic shifts, an advanced degree may no longer be as promising as you expect it to. Some companies will hold off on offering these job posts, as they no longer have as much need for them, and they become wary of hiring applicants with advanced degrees for positions they’re too overqualified for.
Loan interest rates and repayment terms
Education loans are easier to bear and have more favorable terms than many other forms of credit, as there is the provision of postgraduate repayment, so students can focus on studies instead of finances. Most of the loans also offer tax-deductible interest, so one can save money while paying it back.
At the same time, it also comes with downsides. Because the loan is mostly paid after graduation, it can limit your ability to save, invest, or even make any significant purchases such as a home or a business. Long-term debt can easily become a drain on finances for some people, especially if your expected salary after getting a graduate degree doesn’t meet your expectations.
Personal and professional development
Aside from the potential financial gains, advanced education can be greatly enriching. It improves your expertise, builds your confidence, and gives a deeper understanding of one’s field of study. These features do not only make one a professional but also mark up personal satisfaction and achievements. And aside from all those benefits, taking up an advanced degree can help you gain connections with individuals who can be good mentors, potential employers, or even venture partners.
Long term effect
Taking out an educational loan for an advanced degree may forge a secure and rewarding career, especially when it helps you find a promising career. However, education debt is a long-term debt. If you meet unforeseen setbacks such as job loss, health problems, or market changes, you could end up struggling to pay your loans or worse, defaulting on loans may damage credit scores. The long-term implications of borrowing must, therefore, be weighed with career and earning prospects.
Conclusion
While advanced degrees can land you with more prestigious and higher-paying roles and give you a sense of personal growth, it’s also a financial responsibility that may leave you less flexibie in the long run. So, like any other debt, an educational loan has to be taken with careful consideration of your career goals and finances. By weighing the pros and cons, you will be able to make the right decision.
