Drugs, Sex, or Money: Which Is Easier For a Student To Resist?

Imagine you are 18 years old, and it’s your first week in college. You are there because you received some scholarships and grants. It’s your foray into the real world of independent living. The beginning of many tests of your common sense, smarts, and judgment.

Your first day, someone you just met offers you cocaine. You decline, perhaps because you learned somewhere that it could ruin the rest of your life.

The next day, someone in your dorm offers you marijuana. You decline, perhaps because you knew a pothead in high school and don’t want to be like him.

The next day, someone from your hometown offers you a beer. You decline, perhaps because you know you are underage, or because you’ve known an alcoholic in your past.

The next day, your roommate offers you a cigarette. You decline, perhaps because you know someone who died of emphysema or lung cancer.

The next day, someone you find attractive offers you sex. Hmmm, things are getting interesting. You know from school about condoms, STDs, AIDS, not to mention the relationship and moral quagmires….so you…nicely tell them you are very interested but it’s still too early.

The next day, an official letter arrives, offering you student loan money. You have had very little education about money. You don’t know anyone who has died or suffered from money. You apply, get approved, and they send you a check every month. You don’t have to repay it for….years and years. That seems like plenty of time. Surely, they would only approve you for what you will be able to repay, right?  So whatever they send, that’s what you spend.

On the other end of that letter is a lender, who has investors unhappy with their .1% return on their bank accounts. The investors are pushing to make more loans, so they can collect more like 3%, 5%, or 7%. Sound familiar? (Housing crisis of 2007, anyone?)

You receive your check, but because of your scholarship and grants, you don’t need all the money. What should you do? Of course we all know – you should save it somewhere until you graduate and the bill comes due. Instead, somehow, other uses for the money magically appear, and it gets spent.

That is one way a college graduate who had scholarships and grants ends up with $29,000 in student loans at the end of four years instead of $0. According to a study by Experian, 40 million U.S. consumers now have a student loan, and total student loan debt, over $1 trillion, exceeds debt from either  credit cards, auto loans, or  home equity loans. Lenders are pushing loans, and students lack education about borrowing responsibly.

If you know a college student borrowing for their education, help them make sure they’re not borrowing more than necessary:

Try this brochure: https://studentaid.ed.gov/sa/sites/default/files/responsible-borrower.pdf

Or, check out Judy McNary’s book for recent college graduates, COIN( http://amzn.to/1JqshaE).

And if you are the parent or grandparent of a college student, wondering how much to help them out financially, check out Chapter 4 of The Mindful Money Mentality: How To Find Balance In Your Financial Future  (http://amzn.to/1PE3YXF).

Holly Donaldson

Holly P. Donaldson, CFP® writes and consults on the psychology of money. Her fee-only, product-free financial planning practice focuses on increasing financial self-efficacy for those seeking a financial navigator to help them make good decisions. She is the author of The Mindful Money Mentality: How to Find Balance in Your Financial Future (Porchview Publishing, 2013) and publisher of the award-winning monthly e-letter, "The View From the Porch." With a fully virtual practice in Seminole, Florida, she primarily serves clients located in the Tampa, St. Petersburg, and Clearwater areas. Holly will also work with clients who are a good fit located elsewhere in the United States.

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