Students: Learn about your debt
September 11th, 2005 | by mbhunter |My wife and I visited her Alma Mater a bit today with some of her college friends who were in town. Classes are in session again, and many of the students are there with some support from student loans.
The September 5th, 2005, issue of U.S. News and World Report has a short article on A Debtor’s Education (p. 56). A University of Nebraska alumnus, class of 1999, talks about his experience with his $17k in students loans:
- Part of the loan, he admits, were put toward discretionary expenses.
- He consolidated his loan at 7.25% shortly after graduation, then watched as rates dropped to less than half that. (I can’t really fault him too much for this one — who knew that the Fed rate was going to go down to 1%?)
- He used his 6-month postgrad deferment to pay down his $3k MasterCard balance.
Basically, he feels that these weren’t the best moves. He also ” … wish[es] that the seriousness and responsibility of [his] loan had been impressed upon [him] as a young college student.”
This last point may be very true. I was fortunate that I knew how to use a credit card effectively before I went to college (basically, only for convenience, never for living beyond my means). But with all of the offers — “Here, sign up for this card and get a T-Shirt!” — on top of student loans that may not even start accruing interest until after graduation, I can see easily how debt management is a low priority and even downplayed.
But after the “best years of your life” end, the “rest of your life” sets in, and “You owe … you owe … it’s off to work you go!” is what’s sung as opposed to “Hail dear Alma Mater …”
So, learn about what this will mean before taking on a lot of consumer debt. The author of the U.S. News piece did some things right, but a little more learning before graduation might have meant a little more progress toward paying back the loan.
2 Responses to “Students: Learn about your debt”
By Traveler on Sep 21, 2005 | Reply
Good to see you both that weekend. The college debt issue you bring up is a good reason why it would profit high schools to provide and strongly encourage students to take a financial management class prior to graduation. At least Punkin’ should be well educated by the time college rolls around!
By mbhunter on Sep 21, 2005 | Reply
Good to see you as well, Mr. Traveler! That’s where I got most of my good financial education — at home. Little or nothing in school.