Half of college undergraduates say they could have borrowed less money than they did, according to a survey by NerdWallet. It found that the average college graduate borrowed $12,000 more than necessary — and some far more. The average represents an extra $119 per month over a 10-year loan repayment period.
According to the survey, students are spending the extra dough on clothing and dining out — even on spring break trips. Some even admitted to using the money to buy drugs and alcohol.
Do you know how your children or grandchildren are spending their student loan funds?
Abuse occurs because both private and public lenders typically pay the university for tuition and, if applicable, dorm expenses. But remaining funds are then doled out to the students, often in a lump sum, according to Mark Kantrowitz, a member of the editorial board of the Journal of Student Financial Aid.
“If someone is using it for going out on a date or tickets to a sporting event, it’s not a legal violation,” he said. “Once that money is in the student’s hand, there is no control to ensure that he or she is spending it on books, rent or food.”
About 20 percent of American students who graduated in 2016, and who carry debt said they used loan money to pay for vacations, dining out and other entertainment, according to a poll conducted by Google Consumer Surveys for Student Loan Hero.
Meanwhile, according to a survey by LendEDU, 58 percent of parents say their children have asked them for help making student loan payments, and two-thirds of the parents agreed to help. As a result, 57 percent of parents say their own credit scores have been negatively impacted, 51 percent say co-signing has put their retirement funds in jeopardy, 35 percent say they regret co-signing and 33 percent say they didn’t understand the risks when they agreed to sign.
Sound like anyone you know?
The handling and co-signing of student loans are fraught with danger. If you need help in this area, let us know.