“… About one in five American students graduating this year who carry debt said they used student loans to pay for such expenses as vacations, dining out, and entertainment, according to a poll 1 conducted in early May by Google Consumer Surveys on behalf of Student Loan Hero. Undergraduates finishing college in 2014 owed an average of $28,950 in student debt, the result of loans taken out to cover both tuition and living expenses.” …
I propose that the students who would use loans to pay for spring break are the same students who will cry that they cannot afford to pay them back and expect society to pick up the tab.
D will use student loans to help defray any additional costs for study abroad but its my opinion that this is a learning experience, possibly a once in a lifetime event, and falls under “educational expenses.” There is no way in h.e.double hockey sticks I’d allow her to use loan monies for a vacation.
Just pointing out that the title is misleading. The question was about any kind of entertainment- including a dinner out.
You can only get up to the COA in loans (and most students don’t get anywhere near the COA in loan because they only have direct loans). That means there would have to be enough wiggle room in the COA to have leftovers to pay for a trip. Not the case at the vast majority of places.
Really, a non-story IMO. There are lots of things wrong with loans but I don’t think students traveling to the Bahamas on loan money is one of them (because I doubt very much that it’s happened more than a handful of times).
Seconding what @romanigypsyeyes said. I bet MOST kids who answered yes are not taking their loans and booking a trip to Cabo. But they probably are using the funds to pay rent, get a pizza every now and again, or get a ticket to see a movie. I don’t really have any objection to any of that – I mean, I use my scholarship refunds for the same thing, because colleges list ‘personal expenses’ and ‘travel stipend’ and etc on the COA, so when I get a refund for those indirect expenses, I do actually use the money for those indirect expenses… it’s the same with loans, except those kids are going to have to pay back the money.
When the government started the NDL program in about 1980, almost anyone could get $5000, interest deferred. People were taking the $5000 and putting it in a savings account, making money on it because interest rates were high.
Now, I really think most people taking student loans are taking them to live. Sure funds go toward rent and food (even fast food), movies, etc., but it’s okay with me if they want to go on spring break.
When I was in school, sometimes my grandfather would send me $10. I’d go skiing, but I’d have to add $5-10 of my earnings to that. If I’d have had a student loan, I would have used that and felt no guilt.
I had a neighbor friend, (that was married with children) getting her bachelor’s degree, who used her student loan money to do a lot more than pay tuition. I thought it was crazy, but wasn’t my loan I was paying back! You see this all the time on the court tv shows (Judge Judy, People’s Court) where there are students getting financial aid checks and loaning out money or giving money to their friends. Great way to spend my tax dollars!
The Direct Loan money is disbursed to the colleges. It is first used for any billable costs the student owes the college.
Any left over is given as a refund to the student…and frankly, they can do with the money as they please.
Many use this loan money refund for things like their rent and utilities…if they live off campus.
But really…it’s their Loan money to use.
I had college Loan money…and never once went on a spring break trip…because I was working to make money for,the next term. I’m betting lots of students do that too.
That they’re doing this in any big way. Refer to thumper’s post. You must apply loans to your tuition (and other expenses) first. The vast majority of students will not have loan money left over after this. Those that do are not getting paid thousands that they can just give out to friends and whatnot. That’s money that’s going to their living expenses.
And if they are blowing it, remember that it’s a loan. It must be paid back. It’s not “free money” so you’re probably not seeing a “waste” in your tax dollars.
Actually, when a student signs the Master Promissory Note, he or she is certifying that: “I will use the money I receive from any loan made under this MPN only to pay for my authorized educational expenses for attendance at the school that determined I was eligible to receive the loan. I will immediately repay any loan money that cannot be attributed to educational expenses for attendance on at least a half-time basis at that school.” So yes, a student can borrow up to the amount of eligibility, but that student has also promised that he/she will only use the money for educational expenses.
It would be an awfully expensive way to fund a vacation, IMHO.
But then you just use the loan money for expenses and any earned money for a vacation. It would be hard for a school to prove that the COA of $40k wasn’t really needed for living expenses and that the college shouldn’t have authorized enough in loans to live AND go on vacation.
I don’t think there are many students who are borrowing the full COA and not working at all who are able to go on vacations.
Sounds like an issue of how big do you want your loans to be upon graduation–if you borrow more than essential, you will just have to repay + accrued interest later and it will be MUCH more then.
