If there was any doubt that today’s students are in desperate need of classes in financial literacy, it’s this: More than a third of student loan borrowers spent money they otherwise would not have, believing some of their debt would be forgiven by the Biden administration, according to a new poll.
Don’t spend what you don’t have. That concept is admittedly at odds with a country that’s mired in credit card debt. As The Hill reported, a typical American household now carries $10,000 in credit card debt, by one estimate.
The aggregate picture is staggering: the nation’s credit card debt stands at $986 billion, according to the Federal Reserve. A Wallet Hub report put total card debt at $1.2 trillion at the end of 2022.
Paying down credit card debt can be onerous, and a burden on many borrowers – especially if they racked up a good chunk of that debt paying for necessities during COVID shutdowns.
Those carrying large credit card debt loads haven’t marched en masse, demanding the Biden Administration wipe way some of the balance.
Students carrying loan debt are different – vote-seeking pols have told them that the debt they took on, the contracts they signed, the cost they knew was part of going to college is unfair, because it’s too much of a burden.
Surely, they thought, the Supreme Court will side with them.
That’s the thing with a High Court decision – it might not go the way you wish. The Supreme Court struck down Biden’s forgiveness plan last month.
But that didn’t stop the believing borrowers, most of whom surveyed by Intelligent.com were confident they would receive some student debt relief as part of the Biden administration’s plan to forgive at least $10,000 for federal borrowers and up to $20,000 for those who received a federal Pell Grant while in school, the Hill reported.
Among borrowers who spent additional money expecting some debt relief, 9% spent between $5,000 and $7,501 extra, while another 17% spent $5,000 more than they would have had they not expected forgiveness, the poll found.
Borrowers used what they believed would amount to extra money in their pockets on a range of items, though 37% said they paid off other debts. Others used the funds on home repairs and rent payments.
About 20% of borrowers polled said they spent the money on vacation, while fewer than 10% said they spent it on alcohol and drugs or gambling.
Particularly alarming: 27% said they are at least somewhat likely to refuse to pay the $10,000 they thought would be forgiven.
Try that with Visa or MasterCard and see how far you get.
While spending money in the hope that you could afford to do so based on a pending court decision is not the wisest move, student borrowers have been pawns by institutions of higher education and politicians alike. Tuition costs keep soaring, but is there guidance on how to choose less-expensive alternatives, and how to know if you’re getting the education you pay for? Is there help available to determine if your major will get you a job that pays enough to handle your debt?
Of course it’s easy to hear the siren song of those hungry for the youth demographic on voting day.
Consider this a teachable moment.
