College students typically graduate with more than a degree—they graduate with a load of debt.
If you talk to a college student today, you will notice that debt accumulation has been normalized. For college students, debt has become as common as ramen noodles.
After graduation, these men and women start their career years in a significant financial hole. The debt hinders their ability to move forward in life. The debt also hinders their ability to be generous. Debt is a generosity killer.
They live out the consequence found in Proverbs 22:7. They become a slave to the lender.
The start of a new fall semester is right around the corner. Let’s consider a few ways college students can put themselves in a financial hole.
- Assume that high tuition means better education. Some students assume that the more costly schools provide a better education. This is not always true. There are many academically strong yet cost effective options. The College at Southeastern in Wake Forest, North Carolina is one of those schools.
- Exhibit laziness when it comes to scholarship and grant opportunities. There are often many opportunities to receive additional funding for college. However, accessing these funds requires effort. First, students must take the time to explore the options available to them. The best way to do this is to visit the school’s financial aid office. Second, students must do whatever is needed to receive the additional funding. At a minimum, students typically fill out an application. The reward is often worth the effort.
- Take out a lot of student loans. Sometimes students do not realize the future consequences of taking out student loans. They assume that everything will somehow turn out fine. Unfortunately, “fine” is not how most graduates would describe their student loan situation. The loans are a burden. The graduates realize why Proverbs 22:26-27 warns us about loans. Student loans should be avoided if possible.
- Open up a bunch of credit cards. The college years are also the credit card offer years. Credit card companies throw offers at students with the hope of getting them on the hook early. College students are very profitable for credit card companies. Not only do college students create a bad financial habit with credit cards, but they also add to their debt load that limits them after college.
- Fail to put money into a Roth IRA. Most college students are not thinking about retirement. They just want their first job. But if a student earns income, they have the ability to place some of their earning in a retirement account. And this decision can be very beneficial for their financial future. Because of compounding, A little bit of money + A lot of time = A lot of money.
College students make financial decisions that will impact their future. Avoiding a few of these common money mistakes can help them avoid the financial hole in which many graduates find themselves.