Credit has made the middle class possible. It has allowed people with limited resources, but a steady job and a strong work ethic, to afford more – to start a business, to buy houses and cars and to attend school. Loans can be a wise investment, but like any investment they carry risk, and when students and people in general fail to remember this, they fail themselves and their futures.

A loan is more or less an advance on an income you may not even have yet. You receive money to do what you cannot possibly do now – enough money to attend school fresh from your high school graduation, to build a business in spite of your entry-level position at another company, to purchase a house though you need most of your savings for day-to-day costs. In essence, a loan allows you to mortgage your future for present cash.

A loan can be a very good investment, because it makes possible opportunities that you might not otherwise have. But it remains an investment – an advance on future income which is going to come due. That does not mean that all forms of credit are to be avoided, but it does mean that we should take up credit only after serious forethought.

The housing bubble collapsed because loans were being extended with repayment terms that debtors were incapable of matching. When too many of these debtors defaulted on their repayments, this country’s economy staggered, and major companies began to go bankrupt. If we can learn anything from this, it as that credit without forethought can have major consequences on many levels.

It is not a bad thing to take out a loan to buy a house, but it is a bad thing to take out too large a loan to buy a house without realizing how difficult it is to pay it back. It is not a bad thing to use a credit card to buy food in a month when other costs are higher than you expected, but it is bad thing to use a credit card to buy luxury items you do not need and cannot afford. Credit is very useful where it allows people possibilities that their income normally wouldn’t allow, but it becomes detrimental when these possibilities are frittered away rather than understood and implemented rigorously and carefully.

From the national government to the college student, the people of the United States have a problem when it comes to using credit to spend beyond their means. There’s not much the average person can do about the deficit but urge their representatives to make smarter fiscal decisions, but people individually can improve this trend. Students, when you take out student loans, consider your choice of school and major, and weigh your options carefully. If you need a loan to purchase a car, perhaps you don’t need a very expensive car. If you need one to purchase a house, try to stay within your means. Use a credit card for emergencies for your needs rather than your wants.

Credit makes a great deal possible, both good and bad. It falls to individuals to use it discretely and reasonably for positive ends. If students-and the citizens of the United States-can learn to practice self-control and discipline, credit can once again become a valuable tool for achieving more than what would normally be financially possible.