A recent survey conducted by Student Loan Hero, as reported by CNBC, has found that many college students are using some of the student loan money to pay for expenses other than tuition and books. The survey conducted in September 2016 of over 1000 students, reports that 2 in 5 students who receive student loan funds use those funds to pay for things other than their education. Jeffrey Trull, Student Loan Hero’s content director, noted that “it’s pretty easy to use your excess funds this way,” Once a student receives their funds from the lender and the tuition is paid, there are no stipulations on how the excess is spent.
According to the survey, these additional expenses include everything from cell phone bills and other monthly living expenses to alcohol and drugs with clothing socializing and vacations in between. Whereas, the majority of the students who participated in the survey, 41%, say they use the excess funds for monthly bills there are others who reported using the funds to socialize, go out with friends and pay for clothing or accessories that they nor their parents could afford otherwise. While it is understandable that some students may need to use additional loan money for basic living expenses, it is a bit amazing that some student loan money is going to support a frivolous lifestyle.
With student loan debt nationwide topping out at over $1.3 trillion dollars this is inevitably going to cause some financial hardships for these students. In fact, many young people saddled with thousands of dollars in student loan debt are postponing things like buying a house, getting married and having children because of the debt load they are carrying. I agree with Jimmy Lee, CEO of the Las Vegas based Wealth Consulting Group where he advises that students should consider their future earning potential and factor that into their decision about how much to borrow. He says, “That might get them to think twice about using that money for things that are not necessary.”
While I am certainly for higher education, I do agree that students, especially younger students like those going straight to college from high school, should seek guidance in making their financial decisions. They need to be aware of the terms of any and all loans and what the payback options may look like in order to make smarter decision about how much to borrow.
If you find yourself, with an insurmountable amount of debt, maybe we can help you. If you are struggling financially, please contact our office nearest you for a free consultation with an attorney to discuss getting your finances in control.