SPRINGFIELD, Mass. (WWLP) – Student loan debt has reached a record high of $1.3 trillion, but that doesn’t necessarily mean students have spent that much money on college costs.
Every year, the government trusts tens of thousands of college students with millions of dollars. The money comes in the form of student loans. It’s meant for college, but where it’s actually spent is another story.
Student loans are meant to cover the cost of things like tuition and housing but, some students are using that money to pay for everything from clothes to vacations.
Rebecca Gray, a senior at AIC in Springfield told 22News, she has seen it happen first hand. “I see a lot of people spend it on rent, or the phone bill, or the Internet bill,” she said.
Federal student loans are first come, first serve. If one student spends $200 on clothes, that’s $200 another student could have spent on tuition. That’s why Gray believes the government should do a better job of regulating the student loans they give out. “I think having tighter regulations would make it a lot fairer for more people to get loans, who actually can’t afford their books or tuition,” she said.
According to a Student Loan Hero Survey, nearly half of college students spent student loans on non-educational expenses, from vacations and restaurants, to alcohol and drugs.
Financial Advisor Mark Teed told 22News there’s one main reason why this is happening. “I think the reason this is happening is there’s a lack of oversight. There’s not one person following up and making sure the loans are spent appropriately,” he said.
Teed said in the end, students are only hurting themselves. “If you take out more than you need, thinking I’ll just use this extra money for some fun stuff, you’ll end up having bigger monthly payments for the next 10-years.”