With commencement a fading memory much like the title hopes for the Boston Celtics’ “Big-3″, and the school year coming to a close, many past and present college students will be wondering where their next check will come from. Having been both undergraduates and later graduate student ourselves, we understand how important it was to line up at the financial aid office to make sure that student loan check was straight so you could not only pay for tuition, but groceries (thank God for Ramen Noodles), gas and the first month’s rent!
Getting into debt for education is an investment. Of course, some if not all of this debt can be absorbed with scholarships, financial aid, and grants, GREAT! However, most times it isn’t, thus enters most college students first financial bully… Sallie Mae, and ironically her favorite song right now is by Rick Ross, “Where My Money.” We have no qualms with owing Sallie Mae for education, but what gets the epic fail is when student loans are used for clothes, spring break trips, bottle service at the club, hair appointments, video games, and a variety of other luxuries that should be foregone until you have at least saved more “stacks” than you are in years, and have less debt than the size Jordan’s you may wear. Now, we certainly know what it’s like to be a broke college student, but being broke builds character! Well maybe not, but for most students being broke is a reality! Student loan debt must be taken on with the utmost care and not spent frivolously.
Sky High Debt
Currently, the US student loan debt has ballooned to over $1 Trillion! This explains how dependent most students are on loans, and also shows how we are taking on debt more freely and sometimes recklessly. It’s so easy to go online and get another one, two, or ten thousand dollars that most students take out what they need and much more in the name of racks on racks on racks. Not understanding that after they’ve finished their education, gotten a “secure” job, and are ready to make payments, their loan balance could have more than DOUBLED! We know how compound interest works in your favor when investing, however it works against you when borrowing.
Now, we’re not going to grill you about how you need to clean up your student loan funded splurging without offering some friendly advice:
- Before taking on your debt use a student loan calculator to understand what your payments will be after graduation. If you major in basket weaving and this job only pays $25K post graduation, you probably don’t want to commit to loans that will cost $500 per month. Take only the number of credit hours you can afford with scholarships, grants, and unsubsidized government loans, try to AVOID PRIVATE LOANS at all cost! Yes, it may take you longer to finish, but once you do that extra year in school you will have a financial head start on your peers who graduated before you with more debt. Remember, Sallie Mae likes Rick Ross too, #WhereMyMoney.
- Get a job to help subsidize costs. The more expenses you can afford to pay with the money from your part time gig, the less student loans you need. And hey, if you have some extra cash you can even make payments on your loans while in school!
- Remember you are on a budget and trying to “BALL” before you can afford to will HURT YOU! This money is borrowed! If your loan balance is too large it can affect your future by harming your credit score, preventing you from getting a mortgage and even affect your potential nuptials if your mate finds debt unattractive.
- If you don’t finish you still OWE! Some students go away to school for a semester and figure out college is not in the cards, or that they want to travel, or have family issues that require time off. In any event, if you take on loans you will still be stuck with payments even if you never get your degree!
Student loan debt is serious business. You are making decisions at 18 that can and probably will affect you when you’re 30! So borrow smart, spend wisely, and have a repayment strategy other than Y.O.L.O. U DEFINE SUCCESS