As a result of the increasing debt levels, college students are having to delay many life events.
The level of borrowing grew dramatically last year. The U.S. Education Department reports that student-loan disbursements—the amount borrowed by students and received by schools in the most recent school year jumped by about 25%.
These higher borrowing levels are likely due to the poor economic climate combined with the increasing costs of college. Estimates vary, however approximately two-thirds of students borrow to cover the costs of college. This percentage is significants higher than it was ten years ago. New grads are often cash strapped due to high student loan repayment requirements. As a result, they often have to delay personal milestones such as buying a house, starting a family, etc. This trend is likely to get worse for current college students.
Given the high costs of college and the common need to borrow, it is critically important for parents to make sure their student is using their student loans only for true educational costs. Unfortunately, too many students use loan proceeds to pay for lifestyle related costs and non-essentials.
We will be adding some posts with tips for lowering college costs and reducing student loan levels.
Many College Students desperately need to learn money skills.
The list below represents typical quotes from college students on the topic of money matters. A basic understanding of money management is a critical part of the daily responsibilities of college and adult life. Although many of the statements seem comical to experienced adults, they illustrate why so many young people get into financial trouble. We suggest parents spend time teaching their students money skills, or provide them with a quick money management course as the one recommended below:
Money issues are probably the top reason students drop out of college. With that in mind, our Pick of the Month is the excellent course Money Management for Young Adults – this self study video & ebook course clearly explains essential money skills that college students need to understand.
Quote examples of College Students:
-Spending $1,000 using my new credit card is way cheaper than writing a $1,000 check, because I only have to pay back $20 per month.
-The bank must be wrong, my account can’t be overdrawn, I still have 10 checks left in my checkbook
-I think someone’s ripping me off on my first paycheck, who are these people FICA and FUTA, and why are they getting part of my paycheck
-I just got my first credit card, I love it, when this one’s full, I am going to apply for a couple more.
-I am already getting credit card applications in the mail, but my mom is too uptight to let me have one. Once I move out, I’m going to get a bunch of cards, and finally get some cool stuff.
-I am going to work 25 hours a week this summer and will make $8 an hour. I’ll be able to afford that new SUV, and still save tons of cash for college tuition.
-I make $80 a week at my part time job and buy lots of awesome stuff. My parents both work full time, but they’re so cheap, they never buy anything.
-Having a ton of student loans doesn’t really matter; by the time I have to pay them back, I’ll be making the big bucks.
-I don’t worry about filling out my income taxes, my dad always ends up doing it for me, I guess he likes doing it. He’s kind of weird that way.
– I heard that collection agencies can’t bother you until you’re out of college.
– If you never leave college, you never have to pay back your student loans.