Fast Cash, Fast Times: Today’s College Students Living Large On Borrowed Money
College is a major expense, one that statistics say leaves the average college student in debt for more than $37,000. With the cost of tuition on the rise as well as basic living expenses, college students are borrowing more to get through school than earlier generations did. But, are they using borrowed funds for college? Many of them are using it to pay for school. However, a few studies show that with access to fast cash, too many of today’s college students are living large on borrowed money.
Fast Cash Online Makes it Easy for Today’s College Students to Live it Up on Borrowed Funds
While the country’s liberal politicians continue to fight for college students to gain access to a taxpayer-funded education, a recent LendEDU study reveals how college students are actually spending the $1.3 trillion that they’ve borrowed through student loans.
To conduct the study, researchers surveyed 500 college students, and they found that 31 percent of participants used their student loan money to pay for spring break trips to Daytona Beach and Cancun. Along with spring vacations, about a quarter of the respondents admitted that they had used student loan funding to cover the cost of some type of alcohol including spending the money at bars.
A third of the respondents stated that they had used student loan money to pay for clothing items and other wearable accessories. About the same number of students confirmed that they had used borrowed money to cover the cost of dining out in restaurants and for take-out cuisine.
Greg McBride, Bankrate’s chief financial analyst, said, “Students should minimize their borrowing during their college years and live a sparse lifestyle, but no one wants to hear that when their fraternity brothers or sorority sisters are packing up to Cabo for the week. It’s like putting spring break on a credit card, but this one is subsidized by taxpayers.”
Students are Taking out Fast Cash Loans
The Global Financial Literacy Excellence Center at George Washington University completed a different study. It found that students often struggle with personal finance. In fact, of those who participated in the survey, 42 percent of them confirmed that they had used an alternative financial service. This refers to the lenders of fast cash payday, auto title and tax refund loans.
PBS reports that alternative financial service providers have long offered fast cash in poorer communities. Today, in addition to low-income millennials, middle-class and college-educated millennials are taking advantage of fast cash loans.
Why Are Students Turning to Fast Cash Online Loan Lenders?
Students are turning to fast cash online loan lenders because many of them lack the basic financial knowledge to manage how much it costs to live. Shannon Schuyler, the principal and chief corporate responsibility officer for PricewaterhouseCoopers, said, “It may be part of the helicopter-parent trend. They have a lifestyle they are used to, and they don’t realize what things cost.”
When students become fast cash borrowers, many of them are already dealing with massive student loan debts as well as credit card balances. Because they’ve maxed out their available credit through traditional channels, they’re turning to the only borrowing option that they have left, which is to get fast cash online through alternative lenders.
On the Brink of Financial Ruin
Many young people are living on the edge of their finances. About half would not be able to collect $2,000 if an urgent financial situation requiring fast cash developed while about 30 percent of them overdraw their checking accounts regularly. According to Time, young adults are also concerned about their credit scores.
To get fast cash, some of them have discovered the benefits of pawnshops. A financial transaction through a pawnshop can be completed in just a few minutes while bank loans require paperwork and time. They can also be expensive to initiate. Bank loans affect a person’s credit score either positively or negatively, but a pawnshop transaction will have no impact.
Unaware of the Financial Burden of Borrowing Money
Most students know that fast cash loans must eventually be repaid, but what they may not understand is the financial burden of borrowing money. Andrew Josuweit, Student Loan Hero’s CEO, said, “There’s likely a mentality of ‘I’ll worry about this later once I have a job to pay for this’ when it comes to spending borrowed money for nonessentials. Students often don’t understand how costly and difficult it can be to pay back the loans later.”
Students who have plans to enter fields that pay well are likely assuming that their future salaries will be enough to cover the amount that they’re borrowing now. However, most of them are underestimating how high a loan payment can be for fast cash online loans.
How Much Do College Students Think They’ll Earn?
In 2016, Accenture surveyed more than 1,000 college students about their expectations regarding their job prospects and salary amounts. Of those surveyed, 82 percent confirmed that they were sure that they would earn at least $25,000 a year upon graduating. However, 40 percent of students who graduated in 2014 and 2015 reported that they were making less than that. In addition, just 65 percent of graduates were able to find work in their chosen field. Current students who are living large on fast cash appear unaware of these stark realities.
Helaine Olen, the coauthor of “The Index Card: Why Personal Finance Doesn’t Have to Be Complicated,” said, “They’re coming in with massive student loan debt, they’re having a horrific time getting a foothold in the workplace and starting salaries aren’t what they once were. So, you’re supposed to do more with less. How exactly does that work?” It doesn’t work, which is another reason why young people continue to turn to alternative lenders for fast cash after completing college.
Today, the job market is highly unpredictable, which means that students ought to be exercising caution when it comes to borrowing student and fast cash loans. Josuweit said, “Even if they’re eligible for more student loans than they need, they’re allowed to refuse or return this money. Students who borrow for non-educational expenses are simply going to end up in more debt, which will potentially take longer and more money to pay off.”
For those who have already borrowed more fast cash than they need, searching for scholarships or working as a resident assistant in return for free housing could help them get a jump on their debt.
Trading Tomorrow to Have Fun Today
Fast cash loans are making it easy for college students to live large on borrowed money. Instead of being responsible, they’re trading tomorrow to have fun today. Either they’ll wind up in debt for years or they’ll learn about bankruptcy firsthand. It’s better to live on a tight budget and borrow as little as possible to get by. For budgeting tips and more information about fast cash, visit the Personal Money Store.