With this post, I don’t intend to generalize the spending habits of all students, but I do wish to draw attention towards this growing tendency of “I want that cool stuff…right now” among a large number of students. What worries me is that most of these students are supporting their education through some kind of student loans, but they behave as if they have absolutely no responsibilty towards it. Sometimes it makes me wonder whether they aware of the fact that they have to pay the damn money back after a few years.
I can understand education loans burdening undergraduate students while they are studying (funding opportunities for undergraduates are generally limited), but I have seen some graduate students on a healthy stipend get into student debt. One of the main reasons for this is reckless spending at every available opportunity. It’s not like they don’t have the money, they have it, but most of them end up spending it on the wrong things, at the wrong time, and then, before they realize it, they don’t have enough money to pay the tuition and fees for the next semester …! Sounds familiar? 
The worry is not that students are buying stuff…the worry is that they are buying a lot of expensive stuff that they don’t “need” and cannot afford. The worry is the underlying financial irresponsibility. Here are a few examples of some stuff I have seen some of my fellow students (undergraduates and graduates) buy, when they were relying on a student debt from at least one source and had almost empty bank accounts.
There are a lot more of such examples, but I think the point has been established here. It’s important for students to be tech-savy…but they should try to be tech-savy within available financial resources. Show some respect towards your student debt; don’t fall into the “when-I-get-a-job-after-graduation-I-will-pay-everything-off” trap. Student life is meant to be enjoyed, but be discreet in how you choose to enjoy it; if you are not careful enough, that enjoyment is going to bite you hard for a long time to come.
[Btw, I have had my share of some related foolishness in this matter, but fortunately it didn't blow out of proportions and I was able to recover quickly...but let's not talk about that right now ]
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This post is spot on! I’m in grad school right now, and it amazes me how people treat their student loan money as “free money” to upgrade their lifestyles. A buddy of mine, has taken out loans *this semester* alone to fund a trip to San Fran and to get a little “extra” money for partying. It really is shocking!
The “when-I-get-a-job-after-graduation-I-will-pay-everything-off†trap really got us! The salary from the first two year’s of better-half’s job went directly to pay for our grad school indulgences! The sad part is, you dont realise how long it takes to pay off a loan until you start paying it off, by which time too much damage is already done
Prioritizing on what is important should be the key to it. And Balance. It seems so long ago when I finished university, but during the first two years after, I worked my butt off and paid off what needed to be paid off. It got a lot more easier after that, realizing that I have a good education and a superb job…. It was just a matter of time when my priorities started shifting to other than paying loans….
Golb Guru,
Great post and great examples. The “free money” debt trap is one many people fall into, not just grad students. Maybe the “proper” use of debt should be a “required” course
I agree with what you guys have written above…and yeah I would strongly support some kind of a debt course in schools.
Sharon, I am glad you paid everything off. Unfortunately, I am seen some students grossly miscalculate their expenses…and the anticipated salary after graduation; they are still paying off debt after 4 years at the job !
You definately hit the nail on the head with this one, especially the DSLR. I have an SLR and would LOVE to upgrade to a DSLR but I still have my Nikon N75 on Auto, so that pretty much says it all.
But, when I was in college, I wouldnt have though twice about upgrading! Thank goodness that was several years ago and I’m working on being wiser.
Great post!
Great post! I am guilty of all of the above (well, not buying the car, but I may as well have…) and am only now recognizing the error of my ways. I’m still in grad school but working hard to be more financially stable when I get out. First rule: no more student loans!!
Yep. That is the reason why I didn’t want to purchased a laptop as I didn’t see any use of that box except the said reasons. But then my bro needed a “hi end” machine and I couldn’t do anything except purchase it.
Kids these days.
Damn. Spelling mistake in last one. Please ignore.
nku: no problem dude, i often make worse mistakes in my posts :).
everybody: do you have more to share on “stuff” that lures students into debt?
Student loans allow for smoothing of consumption, and therefore are for the benefit of those who plan on having greater earning potential in the future, but at the present time lack the resources to do so. True, those loans will accrue interest, but that is merely a cost of consumption. Most financial blogs merely dwell on one side of the equation–reducing consumption–through cost-cutting mechanisms, but you also need to focus on the other side, the inflow of money through greater earning potential. Particularly at grad school, people know and understand that their income levels will dramatically increase within a couple of years, and therefore can count on those increased earnings to smooth consumption through loans. My two cents…
Matt, I see what you mean and I have no problems with students taking loans. I worry more about student getting study loans for education and the squandering the money on frivolous purchases…I think after a few years at college, some of the may be simply *forgetting* the fact that they are availing a student loan to get them through college. And I should also make it clear that education is not *consumption*, but buying a V8 Hemi powered truck just to travel from home to school is.
I am not at all against loans or anything; in fact I do see debt as a leverage mechanism in many real life instances and people should make full use of such a mechanisms. It’s just that I have seen people who behave with a “oh, I am in debt?..eh, who cares, I still want the $1000 camera even though I don’t know how to use it” attitude.
I’m going to get a laptop for school next year, but only because I’ll be commuting 15 miles from home to school every day. Also, I will be “renting” the laptop from a friend who just got a new one. I’ve had my old desktop for 6 years, so I don’t feel bad upgrading at this point
Great post, Ya i totally agree that there are many examples.
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