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How Student Loans Affect Your Financial Freedom After Graduation

The blog focuses on the negative impacts of a student loan after graduation to help the readers understand and prepare for them.

Student loans are the financial support many undergraduates use to manage their finances during graduation. It gives them the funds for every expense they may encounter during their stay at the university. They believe the repayment will be easy because of the increased income after graduation.

However, repaying the loan with easy is a statement limited to the paperwork only. Many students regret their decision and believe life was better without a student loan. You can blame their inadequate financial knowledge about the loan and money management for it.

Nevertheless, there are certain drawbacks of a student loan that may outweigh its benefits. Here, we will discuss the negative impacts of a student loan on financial freedom after graduation.

A Good Portion of Income Goes to Repayment

You may enjoy an increased paycheque every month after the graduation courtesy of a student loan. Still, a good portion of the income will go to its repayment for years to come. Many young professionals pay up to 20% of their income to the lenders as installments.

You will have less money to spend on essentials, amenities, and some long-term goals. Your affordability for another loan during an emergency will decrease because of the limited budget to manage installments. Though, there are direct lenders that offer loans for bad credit in Ireland if you can somehow afford the installments.

There is No Space for Savings in Budget

The hefty installments will limit your ability to save money. You must have some long-term goals to achieve before retirements, such as a house, car, or retirement fund. Years of consistent savings are necessary if you want to achieve them before time.

Add the other financial obligations as well if you start a family. You need to pay for the school and college fees of your children and some expenses of your spouse. Even a 10% savings during this time may not seem a possibility.

It Takes Year to Repay the Loan

You will live under the stress of repayment during the loan tenure. The most common tenure people decide is 10 years because of the lower installments. Therefore, you will manage the installments for the next decade if foreclosure is not an option.

These are times when some of your friends will visit their favorite destinations and party hard on the weekends. And you have to miss some of them to save enough money for the installments. You can extend the term to reduce stress by refinancing the student loan.  

No Emergency Fund to Rely On

You may not anticipate an emergency and avoid it before the situation strike. These situations require an emergency fund to get through them with minimal damage. However, the loan installments and other expenses may leave you without an emergency fund.

It is recommended to have an emergency fund with a balanced amount equal to your 3 months of pay. If not possible, create a line of credit to access funds during a sudden cash crunch. Credit cards and take online loans in Ireland are some of the options to keep a line of credit available at all times.  

More Debts to Come

As mentioned above, you must have an emergency fund for the financial crisis in the future. The line of credits is the only option in the absence of it. Ultimately, you will have more debt in addition to the student loan.

Increased Reliance on Credit Cards

The limited budget means there will be increased use of credit cards for unexpected expenses. You will use them for repairs, replacement, and some impulse buying at the mall. They may become the only option to shop during the holiday season or on special occasions.

This increased dependency on credit cards is never healthy for your financial status. The interest rates are sometimes unreasonable, exorbitant for cash withdrawal. You should use it during an emergency or when you are assured of its payment the next month. 

Never-Ending Cycle of Debts

The credit card bills and small loans may create a never-ending cycle of debts. You may take some of these loans during the rough patch. There are certain solutions to it, but the student loan will make them hard to implement.

You may have to take a debt consolidation loan to simplify the repayment and reduce its financial stress. But the lenders may not offer a loan amount for the early repayment of student loans. A side hustle is another alternative to manage the finances and repay the other expenses.

Not the Same Lifestyle

Your focus will shift towards loan repayment instead of enjoying the luxuries. This may bring some changes to your lifestyle, mostly to reduce cost. You will limit your vacations, visits to bars, and even date nights with the partner.

All these changes may worth the struggle once the loan is repaid. But it is never easy to maintain such a lifestyle after a pay raise because of the new educational qualification. Your expenses will increase no matter what, and there will be some tough decisions to make.

Late Start for Retirement Funds

People with an education loan find them occupied with the other goals for most of their professional life. They have to repay the loan, save for children, and then pay the house mortgage. This leaves no space for the very important retirement fund.

If you start late, there will be less money to manage the expenses after retirement. The cost of living will remain the same if not increase because of the added medical bills and utilities. Therefore, it is always recommended to start early with the retirement fund to ensure sufficient money in the end.


In the end, these reasons may sound intimidating to young adults with the plan to use student loans for a college education. There are some ways you can reduce its financial impacts, like refinancing, a part-time job during college, and a less expensive school. However, you must learn everything about the loan to get a better deal that will save some serious money.


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