Spend Student Loans Only on College Expenses
It is inherent in its name: a student loan should be used for student expenses only. Although it may be tempting to use student loan money for college football tickets, midnight pizza while cramming for finals, or a Florida spring break trip, try to resist this lure.
You may argue that relaxation, concentration, and performance are ultimately enhanced by these expenditures, so they should be considered school-related expenses. But this argument has a sobering reality.
By using student loans for expenses other than direct school-related items, you are only succeeding in getting yourself more deeply in debt. Since the cost of college can be daunting enough, why would you want to add more debt to the amount you will already be required to pay back after graduation?
When Faith was in the process of filling out her student loan applications, she knew that she had no choice but to rely heavily on this form of monetary assistance in order to be able to afford college. Unfortunately, her parents made too much money for Faith to qualify for any grants. Equally unfortunate was the sad fact that they had consistently spent every dime they made and consequently had not saved up anything for Faith's college education.
Faith wasn't sure how much her tuition, room and board, books, lab fees, and other school-related expenses would be, but she decided to play it safe and borrow the maximum amount available to her. It turned out that this sum was quite substantial. In fact, the check was the largest she had ever received in her life.
Her immediate obligations were to pay for tuition and her dorm's room and board. Then she needed to purchase books and pay for other class materials. With the basic school expenses covered, Faith realized that her checking account was still pretty flush with money from her loan. Surely she could afford to spend a small percentage of her student-loan money on some "extras" to make her demanding and stressful life a little more enjoyable.
With this philosophy in mind, Faith decided to buy a health-club membership. Even though the university's gym was free, she preferred the aerobics classes that were given at a nearby private health club. Also, after only a few weeks of living in her dorm, Faith determined that it was too noisy to study there effectively. Even though the library was a great alternative location to study in and only a short walk from her dorm, she chose to move to an off-campus apartment instead.
Once in her furnished apartment, she bought a feng shui book and came to the conclusion that her furniture and its placement were creating negative energy. Unless she bought and rearranged the appropriate furnishings, she would not be able to perform up to her full potential. Her grades would suffer. This revelation resulted in numerous trips to furniture and appliance stores.
In time, Faith's little "extras" cost her quite a substantial sum of money. In fact, she ran out of money halfway through the semester. Her next installment from her student loan was not scheduled to come until January and it was only October. Faith was incredulous that she had gone through her student loan so quickly; after all, it had been such a large check.
Faith literally ran to the financial aid office to request another student loan to help her in the interim. When they told her that she had already received the maximum amount allowed per semester she panicked. "How am I supposed to survive?" she lamented. A financial counselor sat down with Faith, and together they put together a budget of Faith's living expenses. The solution was not one that fit into Faith's philosophy of "adding the little extras."
The extras had to go. Faith had to find a roommate to split her rent, cancel her gym membership, and stop buying furniture and other nonessential personal items. And if she worked part-time at night, she would just make it to January without starving. So much for her hopes of reducing the stresses of her demanding student life. Her freewheeling spending habits had actually increased her stress, not reduced it.
Like Faith, many students apply for the maximum amount of student-loan money available to them. Upon receiving such a large check, they are often tempted by the funds that they now have free access to. Even though they understand these funds are for school-related expenses, life's many spending opportunities get in the way of their clear judgment.
Before accepting a student loan, it is imperative that all school-related expenses be calculated. These may include tuition, textbooks, and room and board. When this amount is known, it should be subtracted from any financial assistance already committed. This assistance could be in the form of scholarships, part-time campus jobs, summer job income, or money from parents.
If there is still a shortage after the assistance is factored in, you may still need to get additional student loans. However, the amount requested should be only enough to erase the difference. If you receive a larger loan than you need, the temptation to spend the extra money on "fun" things can be hard or even impossible to resist.
Copyright ©2003 Dara Duguay
