Affording The Price Of College

With the cost of college tuition increasing every year, it’s not uncommon for students to borrow more money to pay for their education.  But if students use smart budgeting strategies, and avoid those big-ticket items, they may not have to borrow as much as they think.

  

Professor of economics at South Dakota State University, Joseph Santos says students need to set a boundary for how much money they borrow in loans, and try to *only use that money for tuition.

“You don’t want to accumulate that for essentially what we would call consumable non durables,” South Dakota State University Professor of Economics Joseph Santos said. 

Senior Andrew Phelan has been avoiding that debt throughout his four years at SDSU.

“On the weekends I do have a moving job, I try and help out my parents and make as much money as I can, and also when I go to the grocery store, I try not to spend as much money as I can,” student Andrew Phelan said.

And working is exactly what Santos recommends students do, he says there’s no need to overwhelm yourself, but 10 to 20 hours a week will not only help students pay for their education, but will also teach them responsibility.

“It’s a very interesting way of disciplining ones behavior, because if you have to work, which isn’t a very fun activity you recognize early that you’re going to have to do this to pay off the debt at some point,” Santos said.

Santos says that when students decide to buy those big-ticket items, in most cases the debt far outlives the life of the product.

“What you may think of as assets, that is you buy the large screen television and now you have it, but what you have really is an asset that depreciates at such a horrifically fast rate,” Santos said.

Santos says that the more debt you have, the more it will restrict your mobility and limit your options.

“I can’t take that job, which probably has tremendous growth opportunity, but it’s in an expensive city, and because of the debt payments I need to make, I can’t afford the apartment…. You know well there’s an opportunity lost,” Santos said.

So that’s why it’s smart to make good financial moves now, and Phelan is glad he did.

“The budget that I had, I kept it pretty low for the most part, I mean obviously there is still going to be a little debt with the loans that I do have, but I am going to be overall pretty happy with where I am at,” Phelan said.

With that smart budgeting, Phelan can look forward to more opportunities, without his student debt standing in the way. 


So how much money is reasonable to take out for secondary education?  Joe Santos explains the steps to afford the price of college, without hurting yourself financially in the long haul.

Santos also gives a lot of insight about whether or not it's worth buying that "big ticket" item while in college.  Sure, a lot of people may have the latest and greatest gadgets in technology or fashion, but is it worth putting yourself deeper into debt to enjoy those luxuries?