Editor’s Note: The following is a guest post written by Climb.
Once you’ve decided to enroll in a program, you may find yourself asking the same question as millions of others: should I take out a student loan? For those of you about to enter Product School’s product management course, you may be wondering whether financing the tuition amount will be worth it in the long run.
At Climb, we’re dedicated to lending responsibly: we strive to finance only schools that provide a good return on investment, and we work hard to support students so that they fully understand their loan and don’t over-borrow. And now, we’re incredibly excited to be able to partner with Product School to provide financing for its students. And to help as you weigh the costs and benefits of a loan — and then, as you decide between a student loan and a personal loan — here are just some reasons why you may want to take out a student loan for your product management program.
Why Take out a Loan for Your Program?
Opens up Opportunities
The number one benefit to taking out a student loan is the doors it opens up to more education and career paths. While it’s important to borrow responsibly and not take out more loans than you need, for many prospective students, student loans are the most viable option to cover their tuition. If paying out of pocket or scholarships aren’t in the cards, a loan can help you manage your tuition by breaking it into monthly payments, so you can reach your education and career goals.
At Climb, we evaluate all our partner schools (like Product School) to make sure they provide an education for their students that’s actually worth their tuition cost, and we strive to work only with programs that truly benefit their students. We believe that when you take out a loan to go to school, it’s an investment in your future, and it should enable you to find more opportunities than you had before you took out the loan.
Gives More Financial (and Mental) Freedom
Nobody wants to spend all their savings on tuition and books and then have to cut things like groceries or air conditioning. And while it’s important to keep a budget and not overspend on unnecessary items, you don’t want to completely lose your social life. Maintaining a healthy work/life balance is important to mental and physical health, and if you find that you need more money to cover your course, a student loan can give you the financial freedom to do more than work and study. And you may even end up making connections that benefit you after you graduate!
This added financial freedom then allows you to focus on what really matters while you’re in school — your lessons. According to a report by Public Agenda, 71% of people who didn’t complete their education listed “I needed to go to work and make money” as the reason they dropped out. If you don’t have to take a side job to earn money when you could be studying, and if your days aren’t filled with stress about your bank account or tuition payments, that space can be taken up by really absorbing what you’re learning in class and making sure it sticks.
Helps Build Credit
While having too much debt can hurt your credit score, especially if you don’t keep up with your payments and make them on time, taking on some debt won’t necessarily hurt your credit — and could strengthen it over the long term. An initial credit pull when you take out a loan may negatively impact your score. But after that, as you build a credit history, manage your accounts well, maintain good payment history, and ultimately increase your earning potential through your education, you can actually boost your credit profile. Of course, you’ll need to ensure you’re making on-time (or even early) payments to see this positive effect!
Why Take out a Student Loan Instead of a Personal Loan?
Lower Interest Rates and Fees Than Most Personal Loans
When it comes to private student loans and personal loans, both have interest rates and fees that vary from lender to lender. And while the interest rates of private student loans are often higher than federal student loans, they are in general substantially less than those of personal loans. And in addition to lower interest rates, private student loans also typically come with no prepayment fees (such as with a Climb loan, for instance) and lower origination fees than personal loans, which reduces your total payments even more.
When these are factored in with Climb’s ability to help students with lower FICO scores, while most personal loans are more focused on approving people with higher FICO scores, financing becomes much more affordable and widely available to those looking to further their education.
Unlike many personal loans, often times private student loans will offer incentives for their borrowers. Things such as an interest rate reduction for setting up automatic loan payments from a bank account or adding a co-borrower are just a couple examples of offers student lenders may make to their borrowers.
For instance, at Climb we offer a .25% interest rate reduction for students who set up automatic payments from their bank accounts. And we have the option to add a co-borrower to your application, which may help you get a lower interest rate. And simply submitting a Climb application has no impact on your credit score!*
Finally, when deciding to take out a student loan or a personal loan, one other thing to consider is your taxes. There are several things to take into account when you’re filing taxes and have student loans, but one thing to note is that student loans are tax deductible. Personal loans, on the other hand, are not. So if you’ve got tax season on the mind, you might want to consider the money you’d save by deducting your loan from your tax return.
Of course, there are several factors to take into account when figuring out how to pay for your education, and no one payment method fits everyone. Some may not work for your situation or may not be available for your program. Student loans aren’t the best option for every person, but for many, they may be able to provide benefits that ultimately far outweigh the initial cost — such as an opportunity to reach your education, career, and financial goals; benefits to your credit profile and taxes that aren’t available through other options; and better, more flexible loan terms, as opposed to personal loans.
If you want more information about student loans, please don’t hesitate to reach out to our Student Success Team — we’re happy to answer any questions you may have! You can reach us through live chat at climbcredit.com, email at [email protected], and phone at 888-510-0533. We’re available 9am–9pm EST, Monday–Friday.
*A hard credit pull is performed once a loan is funded, which may impact your credit score.