College Debt. Some of students could not able to continue college education because of their family

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Oswald Ross
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1 Mishra 1 Sita Mishra Professor Brian Balie English November 2017 College Debt Every year thousands of students graduate from high school and ready for the colleges. Some of students could not able to continue college education because of their family conditions. Students who can continue their education in college, will have financial difficulties. Some students get qualified for financial grants such as FAFSA and scholarships, but some must start with student loans which is college debt. The grants won t be sufficient throughout their classes. Ultimately, they must borrow loan to continue their education. Basically, borrowing loan is fully depend on the colleges. Some private colleges are very expansive which results the huge financial debt. There are many alternative colleges which are less expansive. Students can join the community colleges for associate degree and later they can transfer for four years to universities. This decision could be more helpful to the students for saving. According to my friend Santal Carr, whom I had interviewed about college debt, it is hard to get financial aid as well as loan and harder to pay back in her country, Jamaica. As I am also an international student, I heard my country also has same problem as Jamaica. Combining this information and my first-year experience in college, I get motivated to write about college debt to encourage my college colleagues towards financial literacy. It is very crucial to be self-educated on handling money before continuing college. If the students are not able to figure out how to organize

2 Mishra 2 their financial behavior, result could be unmanageable. Therefore, Students should be financially literate to avoid the consequences of heavy college debt. Students should be financially literate because it helps them to understand borrowing responsibility. They should understand how much they need money for classes and how they can manage it. In the United States, every student need to borrow loan to finish their study, but in some country its harder to get it. It is harder for every student to get educational loans in Jamaica than the United States because when they take loans to study in the island, it is fairly high and hard for some to pay back. (Carr) Not even in Jamaica, college students in my country (Nepal) are also facing the same problem. They should pay the tuition fee prior to the semester otherwise, they could not continue their education. Americans owe over $1.45 trillion in student loan debt, spread out among about 44 million borrowers. That s about $620 billion more than the total U.S. credit card debt. In fact, the average Class of 2016 graduate has $37,172 in student loan debt, up six percent from last year. (Student Loan Hero) This statistic shows that student debt is comparatively more than the U.S credit card debt. The number of graduate students from high school are increasing every year, which means the college debt is also increasing at the same time. It is easy to borrow loans in the United States, but students should have the knowledge about minimum borrowing behavior which can be paid easily in the future. If it is determined that borrowing beyond the amount in your award is necessary, borrow only what you need and not what you desire. (Colorado College) If students borrow what they desire could bring massive debt problem after graduation, which will be hard to pay back.

3 Mishra 3 First thing to minimize the borrowing behavior is grants. All students get opportunity to apply for financial grants, but they can be approved as per their needs. If they offered grants, it can help the students to borrow less loan. Students should always be careful on borrowing loan. If they have enough money to pay their tuition fees, they should pay by themselves instead of borrowing loan. Taking out a loan is an important financial decision that can affect a student for years to come. It is critical for students to understand their loan options and associated responsibilities in order to make good borrowing decisions. (fin-lit-guidance PDF) Pay back money will be always more than what the students borrow due to the interest on every year. Borrowing loan is the final alternative to pay the tuition fee. So, students should borrow loan only if they don t have any way to pay it. Borrow as little as possible. Every dollar spent repaying student loans is a dollar that is not available for other priorities. (Edvisors) Heavy borrowing loan could cause stressful situation during study as well as in future. To create peaceful situation in present and future, student should be financially literate. Sense of budgeting is also one of the important reason of financial literacy. Many of students do not know how to create the budgeting life and how it helps to move forward easily. Taking the time to create a budget helps keep your finances under control, show when you need to make adjustments to your spending, and helps you decide where your money goes instead of wondering where it all went. (Herzing University) Every student has a thought that being a college student should wear branded outfits and use expansive materials. They spend so much money on foods, dress up, expensive stationary, which is worthless. They don t know smartness comes with smart mind not expansive outfits and materials. Basically, when creating a spending plan, you compare your income to your expenses. Making your income and

4 Mishra 4 expenses match OR having more income than your expenses is the goal. This means your financial life is in balance and you are living within your means. A negative number means you are spending more than you are earning and need to adjust your spending habits. (UNL newsroom) Going to full time college means zero income and zero expenditure. Spending money should always depend on earning. If the students work part time, then they should spend as per their pay checks. When the students know how to balance the earnings and expanses, that is called financially literate. Students should always spend money on what they need not on what they want. It is a good idea for students to create a need versus wants checklist. Doing so, in combination with creating a budget, is a good starting point for students to reach their short- and long-term goals. Needs are required for survival (food, clothing, shelter), and wants are things that might not be as necessary as students think. (fin-lit-guidance PDF) They should be farsighted and stay budgeting to get peaceful situation after graduation. There are nine ways to cut the cost of college such as, choosing of school, buying textbooks, housing, sharing expenses with roommates, cable, transportation, food, coffee and party fund. (Fay) I saw some of students are going to private colleges which is great but only if they can afford there. Choosing the inexpensive community college is not a bad idea rather it is a step towards budgeting behavior. Financial literacy includes borrowing and budgeting behaviors during the college life, which helps the students on money management even after they graduate from the college. So, the money management is also one of the important reason for financial literacy. With the rising concern of students graduating with debt from college loans and tuition, being aware of

5 Mishra 5 personal finance is all the more important for college students. (Holley) If the students concern about those things, It helps them to lower the debt and stress in later future. After graduate, still many of students do not know how to manage money. I saw many graduate students getting the decent jobs, but then also they still have the problems of money mismanagement. Getting a better job is not only the solution for improving financial condition. If the students are financially literate, it helps a lot on how to manage money. For example, if they go to market and wants to buy something, financial literacy helps them to know which are affordable for them and how to saves little amount. In fact, good money management reduces stress. It helps you keep track of how much money you have and plan you will use it to meet current needs, reach future goals, and build solid credit for your future. (Financial Management for College Students PDF) If the students have more knowledge about the financial literacy, they know how to manage money and improve their living standard. Getting in the habit of creating and maintaining a budget in college can make it easier to manage more complex finances successfully after graduation. (Well Fargo) If students have a habit to save money during college, it will keep them habitual on saving after they graduate. Some people say that students do not have to worry about the college debt during the study. However, they are wrong because students should be aware of the consequence of college debt, which can improve the financial behaviors. Financial literacy leads not only the students, it can impact their family s economy. Teaching financial responsibility to our children is not just about paying for college. These are skills and knowledge necessary for every aspect of personal fiscal management, whether it is raising and supporting a family or planning for retirement. (Klemmer) It is helpful on improving the financial situation of their family.

6 Mishra 6 Therefore, financial literacy could be helpful to keep the students away from the stressful situation during the study as well as after graduation and they might get more focus on their study. In conclusion, when the students are financially literate, they know how to manage the financial behavior which keeps them away from the consequences of heavy college debt. It is important to learn about the college debt because many students are borrowing more loan than what they need that could be huge debt trouble in the future. Before borrowing loan, students should apply for the grants and scholarships which are non-returnable. Then, if the grants are not sufficient for tuitions fees, borrowing behavior should applied. After research, I compared the status and the importance of college debt among Jamaica (Carr s country), my country and internet. I got the conclusion that wherever I go to college, I should be financially literate. Students should have knowledge of borrowing loan, budgeting and money management to be safe from stressful situation of huge college debt.

7 Mishra 7 Work cites Resposible Students Loan Borrowing. Edvisors, Carr, Shantal. interview. 5 November 2017 LaMar, Linda. Financial Management for College Students [PDF]. Developed for the Office of Scholarships and Student Aid. June 2012 An office of the U.S Department of Education [PDF]. Federal Student Aid. November 2017 Writer, Author Max Fay Staff. College Budget: How to Save Money & Cut Expenses in College. Debt.org, FINANCIAL AID POLICIES HANDBOOK. Colorado College, Financial Literacy Resources. Herzing University, 13 Apr. 2017, Budgeting for College Students. Well Fargo, A Look at the Shocking Student Loan Debt Statistics for Student Loan Hero, 13 Sept. 2017, studentloanhero.com/student-loan-debt-statistics/.

8 Mishra 8 Klemmer, Jane. Borrowing for College: Exercising Financial Responsiblity. Unigo.com, 5 Aug. 2015, Holley, Eileen. Financial Literacy Must Be Taught at a Young Age to Promote Smart Decisions. The Daily Cougar, 1 Sept. 2014, thedailycougar.com/2014/09/02/financial-literacy-musttaught-young-age-promote-smart-decisions/. 6 Common Money Management Mistakes College Students Make. UNL Newsroom, newsroom.unl.edu/announce/parentnews/1426/8291.

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