<p>Someone once told me that debt that a person accumulates because of going to undergrad and grad school is called "good debt?" Is that true? What this person meant by that phrase is that creditors would not hold it against you if you have "good debt." If you want to take out a loan for a house, your "good debt" would not be a factor in you not recieving that loan. Is all of this true?</p>
<p>if you can show you can continue to pay off your school loan and a mortgage at the same time, then they will likely give it to you.</p>
<p>Per my response here: <a href="http://talk.collegeconfidential.com/showthread.php?p=2757959#post2757959%5B/url%5D">http://talk.collegeconfidential.com/showthread.php?p=2757959#post2757959</a></p>
<p>Yes, student loans are considered "good debt;" however, that doesn't mean that the amounts are ignored on your credit report. Having too much debt or paying late is bad no matter what your mix of debt is. They definitely will factor into credit decisions, but there will be both positive and negative effects.</p>
<p>What lenders like to see is someone with a long credit history without any late payments. They also like to see someone who takes advantage of their good credit and borrows smart. That's where the idea of "good debt" comes in. Student loans and home mortgages are considered healthy forms of debt--investing in a home or college is usually a good investment and lead to better ability to pay at a later date. They also result in regular, steady payments, which demonstrate ability and willingness to pay, unlike credit cards, which can involve erratic payments depending on your spending patterns. As you get older, not having these items may actually count against your credit score.</p>
<p>On the same token, there are also "bad" forms of debt. The most notorious is store charge cards. It is good to have at least two major credit cards for everyday purposes; however, charge cards are usually limited to impulse buys and creditors don't like to see them.</p>
<p>Actually, Suze Orman always talks about the concept of "good" debt vs. "bad" debt. (Good debt is taken on in the hopes of making money in the future: investment home mtgs,business loans, student loans, etc. whereas "bad" debt is credit card purchases for things not needed but wanted, fancy car loans, etc.)</p>
<p>She says that with bad debt, especially consumer debt you are using your future to pay off your past.</p>
<p>However, this does not negate the fact that you should have a strong credit rating an low debt (as all debt is still debt when it comes to applying for credit and getting a mortgage) especially if you plan on attending law or medical school because the amount of money needed to extend exceeds the stafford loan limits so many students will have to take on additional loans. Some law schools especially Penn stress and strongly advise take your credit worthiness into consideration in the admissions process (because if you can't pay, you can't attend)</p>
<p>Student loan debt may be intrinsically viewed as good debt because it typically helps build valuable human and intellectual capital, which in turn can be rented out for considerably more than otherwise would be the case in the absence of such education. And this cannot be lost on creditors and rating agencies.</p>