Trends in Student Loans: How It Affects Borrowers Now

     The idea that money doesn’t grow on trees is far from new. But the fact that this also applies to both private and public sources of loan money seems to go over some people’s heads. Just like all other people and companies, banks, schools and even the government have limited amounts of money. So, when they dole it out to college students looking for financial aid, they can only give so much to so many people. And this is why most lenders use a first-come first-served system. The earliest applicants get the best chance at getting all of the money they need. But when they start to run out of money to give, they have to give less to everyone else. 

     This is why the amount you borrow is just as important as the amount you can pay for yourself. Any person who dips into the pot is taking that money away from someone else – not out of cruelty, but just because of the way the system is set up. So, the morally right thing to do with your student loans is to, well, use them like you’re supposed to. Use them on tuition, living costs and transportation to and from school. And even more important, only borrow what you absolutely need in order to pay for those things. 

     If you think that this moral contract sounds like common sense, you’re not alone. This has been the unspoken code of borrower ethics for decades. If you need money for school, you use it for school. But recent trends suggest that more and more students are redirecting that loan money into personal purchases (vacations, clothes, etc.). Even worse, some are borrowing more than they need in order to finance personal purchases while still covering all of their responsible expenses (like school). In one scenario, you substitute clothes for tuition. In the other you sacrifice neither. In both scenarios, you are taking money away from someone else who needs it more. And because loan money isn’t traceable, regardless of where it comes from, there’s no way to police how it’s being spent. 

Surya Amundsen, 18, Waterville Senior High School.

     Surya Amundsen is a current senior at Waterville Senior High School and a future university student. She didn’t express concern about what this could mean for her own loan situation. She was concerned for what it could mean for some of her other low-income classmates. “There are plenty of students with significant financial need – they cannot feasibly pay for college without aid. And the government can only loan out finite sums of money. So it is important that (those) who will receive it will actually use it toward its intended purpose.”

Hazel Dow, 17, Waterville Senior High School.

     “It’s called a student loan for a reason,” Hazel Dow, a junior at the same high school, said. “It’s meant to be spent on education expenses and making a better future for oneself.” 

     Strangely enough, both young women also acknowledged the temptation to fund a lifestyle using loans. For example, it could be one using, say, earnings from a part time job. “Just thinking about financing a life of luxury with student loans is tempting. I mean, the money is right there!” Hazel said. “The chance of getting caught is pretty slim. So yes, it’s very tempting.” 

     But after they had separated urge from action? Well, the sympathy seemed to dissipate. “This use, or misuse, of student loan money is not fair to other students,” Hazel said. “One student’s moral misconduct shouldn’t result in a loss of opportunity for another.” 

     Clearly, from the perspective of a borrower, there’s a moral divide between longing to be irresponsible and actually choosing to be. There are enough economic and social walls between people and education. And as for the consensus among future borrowers? Let the haves and their wants not impact the have-nots and their needs.