Student loans can make college education possible, but they also come with their share of drawbacks. Whether you’re heading off on your own or taking out a loan to cover part of a parent’s college tuition, it is essential to understand how student loans will impact your personal finances in the long run.

1. You’ll Pay More in Interest

Student loans can have a substantial effect on your personal finances. From the time you begin college to when you receive your diploma, you will be repaying these loans for years to come. Fortunately, there are steps you can take to manage this debt more easily.

Starting today, you have the power to find the ideal student loan deal. Select from federal, private or non-profit lenders in order to find what works best for your unique situation. It may only take talking with a financial aid specialist at your school or using online student loan comparison tools to find it.

While you’re at it, consider refinancing your debt or using the knowledge gained from this newfound education to leverage. You might even qualify for federal grants and scholarships which could reduce or eliminate your student loan burden altogether. The key here is to plan ahead and keep your financial objectives in mind.

2. You’ll Have a Lower Credit Score

Your credit score is a three-digit number that measures your creditworthiness. It’s calculated by the three major bureaus – Experian, TransUnion and Equifax – and having a high score can provide you with lower interest rates or larger loans.

Your payment history is the single most influential factor in calculating your score, accounting for 35% of it. So if you make all of your student loan payments on time, this will have a beneficial effect on your score.

But if you miss some payments or default, your credit score could take a hit and remain negative for up to seven years.

There are ways to minimize the negative effect on your credit, such as switching to an income-driven repayment plan or delaying monthly student loan payments for a few months. Before making any changes however, be sure to speak with your lender first.

3. You’ll Have to Pay More in Taxes

Many borrowers worry about how student loans will affect their taxes, particularly Millennials who are more likely to worry about this aspect than older generations.

One way student loans can affect your taxes is through deductions. Interest payments on both federal and private loans are tax deductible.

Deductibility for tax purposes is subject to certain income criteria. Check on your loan servicer website to see if you paid any interest during the year, then use that info when calculating your deduction.

Another potential tax break that may be available to you is debt forgiveness. This could be through the federal student loan cancellation plan or Public Service Loan Forgiveness program.

4. You’ll Have Less in Emergency Funds

Student loans are typically used to cover tuition, fees and room and board (if you live on campus). But sometimes extra funds may be necessary for unexpected expenses like car repairs or medical emergencies.

One way to deal with this problem is by building an emergency fund. While it may take some time, saving up 3-6 months worth of expenses can be a wise financial move.

Another way to ensure you have extra cash for unexpected expenses is to refinance your student loans. Doing so may reduce monthly payments by reducing the interest rate or extending repayment period.

If you’re thinking of investing in savings, it is best to first investigate a 401(k) matching program at your employer. This can be an excellent way to start building up an emergency fund and earn a good return at the same time.

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