When you go to college, taking out student loans may seem like a good idea, but can have negative consequences. Loans come with interest, which is the fee associated with the privilege of borrowing money, and is usually expressed as an annual percentage rate. For example, if you take out a $5,000 loan to help pay for a new car, the bank may charge you interest. Let's say the annual interest rate is 3% and it takes you 4 years to pay it off. Because of the 3% interest accrued, you'll owe the bank an extra $150 each year and your loan will end up costing $5,600. The larger the loan, the more interest rates affect it. There are many different types of loans that one can use. We will use the example of the unsubsidized, low-interest federal Stafford loan created specifically for students. Unsubsidized means the borrower will have to pay all accrued interest, unlike subsidized loans where the government pays your interest. Unsubsidized loans make a big difference to your accrued interest. Let's say four students are heading to college: Artie, Beth, Carter, and Danna. All are working to become dental hygienists. Each earned a grade point average of 3.5 or higher and must find summer employment. Artie and Beth work as tutors, charging $15 an hour, and work ten hours a week until the next college term begins, accumulating approximately $9,450 in tuition savings. All students live at home for the duration of their college education, so there are no out-of-state fees. All loans that can be taken out have an interest rate of 5%. Artie graduated high school with good grades and starts his summer job. Artie charges $15 an hour and tutors 10 hours a week in the middle of his college studies. Each year at Pacific costs $37,024, which works out to $148,096 for four years. Danna also has to take out student loans, which have an interest rate of 5%. Upon finishing college, Danna gets a job as a dental hygienist that pays $78,160 a year. His loans accrued interest over four years, totaling $155,500.8. With monthly payments of $730, it still takes Danna almost 44 years to pay off her debts. As you can see, taking out student loans can hurt your finances and your stress levels. Having a job and/or saving ahead of time can go a long way toward paying for college, as you saw in Artie and Beth's cases. In Beth's case, I would say taking out student loans is okay, but still strongly discouraged. It doesn't matter how old you are when you start college: If you're saving to avoid debt, I say it's often worth the wait..