The freedom of college often comes with students? first exposure into the world of independent finance, such as student loans, bills and credit. One common financial situation college students deal with is student loans.
According to Andrea Pellegrini, the assistant director of the Office of Business and Financial Services, many students feel conflicted about loans.
?Student loans are a double-edged sword, in that higher education is almost always needed to make money, but money is needed to obtain a degree. Students question if the debt will be worth the cost of the education in the long run,? she said.
College students often wonder if they will be able to make enough to pay off their loans when considering borrowing money, Pellegrini said.
She cites ?over-borrowing? as a source of many students? loan problems and has contributed to an all-time high of $1 trillion in student debt. She advises students to only take out money they absolutely need and to have realistic expectations of their spending.
To put the student debt increase into perspective, UIUC finance professor Kevin Waspi compared it to LeBron James? salary.
?Let?s say LeBron James makes $40 million per season. He would have to play 25,000 seasons at that salary to pay off the one trillion dollar student debt,? he said. ?Student loans have become a necessary evil. If I were a student today, you better believe I would study my a** off to make the best of those student loans and not go into debt for years.?
When asked how students can get the best financial value out of their education, Waspi said that since the cost of education is so high everything should be prioritized so money isn?t wasted.
?If a Ford employee works a 40-hour week, in theory, a full-time student should study 40 hours per week,? he said. ?That is where the true value of investment in education lies.?
The high costs of college are inevitable for most students, but as Pellegrini points out, this campus offers many options that students often do not take advantage of. Beside scholarships and part-time employment, there are various programs that cater to college students.
The ARC?s financial wellness program located in the Wellness Center, for example, offers a number of services, presentations and one-on-one counseling to students in an attempt to educate them about fiscal responsibilities.
The University?s TCF Bank center, housed in the Illini Union Bookstore, also offers several incentives, such as free checking accounts and withdrawal services to students who open up independent accounts, according to a TCF representative.
?Because of the future?s unknowns, habits of thrift and saving set a good foundation for the rest of your life,? Waspi added. ?Don?t get into investing this early, just concentrate on your studies and saving as much money as you can.?
Hannah can reached features@dailyillini.com.
Source: http://www.dailyillini.com/article/2012/10/over-borrowing-biggest-mistake-in-student-loans
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