News Article #3 - Article on Student Debt and Loans

JOUR 2410-504                 Nov. 18                  News 4

     Texas Tech personal finance professor David Wilder said students should consider getting credit cards to build credit, and urges to be wary of spending habits.

     Wilder said building credit is the most important thing he teaches about credit card management. Students need to build credit in order to take out mortgage and buy a house.

     Students should at least have one credit card so they can start building credit, Wilder said.

     Justin Nusser, a sophomore electronic media and communications major from Spring, Texas, said he recently got his first credit card.

     “I had no idea having a credit card would have that much impact on your future,” Nusser said as he sipped his coffee.

 “I’m glad I decided to get one.”

     Wilder said students should not have to pay to get a credit card. The most important task for a student with their first credit card is to pay off the bill every month.

     Wilder said students should watch their expenses before they run into trouble with debt.

     “It’s a lot easier to go out to a bar and throw the bartender or waiter a piece of plastic,” Wilder said.

     Tech students have the convenience of Red to Black, a program that assists Tech students, faculty, and staff. Red to Black provides financial coaching through debt and other important financial decisions.

     According to Project on Student Debts website, the average debt of Tech graduates in 2011 was $10,138.

     Becca Wilson, a freshman pre-nursing major from Stephenville, Texas, said she is paying for school on her own and is nervous about the money she owes after she graduates.

     “Nursing school is very expensive,” Wilson said, “and I know I’m going to owe a lot of money when I graduate.”

     When students do run into debt, Wilder said the first thing to do is to speak to somebody. He advices to also create a budget, cut out daily expenditures, and get into contact with the credit card companies for assistance in paying off the debt.

     According to the article “Student Debt” by The Canadian Press, students need to develop good budgeting skills and consider taking on a part time job during school to assist in debt payback.

     Students tend to borrow too much money for their loans, Wilder said, which leads to students spending their loan money on unnecessary things such as laptops, clothes, and food.

     “99 percent of my students, while doing a budget, underestimate their entertainment expenses,” Wilder said as he paced around the room.

     Wilder said it is not possible to predict how much you will spend at the beginning of the month, but it is wise to limit yourself with time.

     “That way when you create that budget and you’ve limited the money you’re going to spend on entertainment and such, you can use that money towards paying off the student loan or credit cards,” Wilder said.

     Despite the difficulty for students to deal with loans and debt, Wilder said a college education is worth the risk.

      “It’s really hard to put a price on a college education,” Wilder said. “In 10 or 15 years, you’re going to look back and say yes, it was worth it.”