Do You Have Too Much Debt for a College Student?

By Lorena Roberts on October 25, 2018

As a college student, “debt” is not a stranger. We’re all swimming in student loans — you aren’t the only one. According to Forbes.com, 2018 student debt is topping $1.5 trillion dollars. Trust me when I say you aren’t the only one worried about how you’re going to pay that amount of money back.

But there’s a difference between borrowing money for an education, investing in yourself and your future, and opening seven different credit cards so you can impulsively buy the things you want at any time. So do you have too much debt for a college student? 

To assess your current debt situation, there are a few things you need to ask yourself:

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1. How many credit cards do you have?

We all know what it means to build credit — pay your bills on time, utilize a certain percentage of your credit allowance, make consistent payments (that are more than the minimum), and restrain from opening more than one credit card before you’ve established a career with a monthly income.

If you’re a college student and you have more than one credit card — think again. It’s not the right time in life to have that many lines of credit before you have a steady, monthly income. It’s hard to restrain from opening multiple credit cards. As soon as you step foot on a college campus as a freshman, companies are coming after you to open up a credit card with them — preying on the fact that you’re young, inexperienced, and impulsive. If you fall for their tactics, you’ll soon owe thousands of dollars in credit card debt… on top of the thousands you probably already have in student loans.

2. Are you paying your bills on time?

If you’ve gotten yourself in a situation where you can’t pay your bills when they’re due, and you’re waiting until your next paycheck comes in, it’s likely that you’ve gotten yourself in a situation where you’re too far in debt. Not only do you need to make sure you can pay your bills, but you should make sure you can pay them on time. If you can’t, you’re too far in debt.

3. What amount of student loans is too much? 

If you’ve taken out student loans (which it’s pretty likely that you have), you might be feeling nervous about how you’re going to pay them back. So what amount of student loans is more than necessary? According to US News, it all depends on your anticipated salary once you’ve finished school. If you’re going into a field where you’re only going to make about $40K per year, it’s probably not smart to take out $100K in student loans. It’s all relative, my friend.

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4. What’s your car payment/housing situation?

If you decided to go out and buy a new car, making payments on it with your student loan refund for the semester, you’re probably not making good financial decisions. The best thing you can do for yourself while you’re in college is save as much money as you can. This includes the decision you make about where and how you’re going to live. Sure, we all want a one-bedroom apartment downtown, but is that really necessary? It’s financially smarter to rent an apartment with multiple roommates in order to keep your monthly payments down. Yes, roommates are annoying… but at least you’re saving half of what you would be spending on a one-bedroom by agreeing to set some strong boundaries and live your best life with multiple roomies.

5. What habits are you setting now, as a young adult, that will follow you through the rest of your life?

If you’re allowing yourself to buy things impulsively, stack up the amount of money you owe in credit card debt, and overwhelm your bank account with bills, you aren’t setting yourself up for success in the long run. In fact, if you think about the absolute necessities that you need now, while you’re in school, it’s a) crappy food, b) a bit of fun money, and c) a lot of time to dedicate to your studies.

It’s unnecessary for you to impulsively buy things you want when you’re in school. You’re likely not making very much money (if any at all). So while you’re in school and “roughing it” is the “norm,” go without the things that you think you need and settle on having just the necessities. Refrain from opening up credit cards with every company that approaches you during your first week on campus. Only set up automatic withdrawal for the bills you know you can afford, and stay away from shopping sprees until you have a steady income.

While you’re at it, check out some benchmarks you should plan on meeting if you’re going to be able to retire comfortably. The earlier you start, the more likely you are to be comfortable in retirement. Instead of spending every last penny you have now, wait and reward yourself as a 65-year-old with a huge stack of dollars in your bank account. Instead of being impulsive about things you want now, while you’re in college… focus on the future.

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