College can be a tough time. Between homework, jobs, organizations — and sometimes children — students have a lot on their plates. One of the biggest stressors of all is finances. College students across the country incur thousands of dollars in debt every year in an effort to fund their education. Although enjoying one’s college years is arguably important, it is just as important for students to be conscious of making financial decisions that will affect them in the future. Here is a list of the top money and credit mistakes Black college students make.
- Misuse of student loans
Taking out student loans is sometimes necessary, but many students make the mistake of using them for other expenses besides their education. Using loans to pay for unnecessary items such as clothing, game systems and hanging out develops poor spending habits. The best way to pay for these types of expenses is to work part-time while attending school. This will allow students to borrow only what they need for educational purposes and protect them from damage that may be done to their credit in the future.
- Taking too long to graduate
The longer a person stays in school, the longer a person is likely to accumulate debt and student loans, putting them further behind and doing potentially doing more damage to their credit in the long run. Taking more credits each semester will not only get you to graduation faster, it may also be beneficial to your finances as some schools offer discounted tuition over 12 credits. For example, the University of Michigan-Flint offers lower tuition rates for each credit beyond the 12th credit each semester.
- Doing favors for friends
According to Nicole Johnson, senior admissions advisor at Eastern Michigan University, many students make the mistake of doing favors for friends.
“It happens all the time. Students get something in their name for a friend or fraternity [or sorority] member and they never pay, or they get an apartment without making the roommate sign the lease.”
This is a major no-no, as the student who has volunteered their name and Social Security number for a friend will be stuck with payments and a decreasing credit score if their “friend” decides to bail.
- Making up for lost time with student refunds
Although this may sound a bit similar to point number one, there is a difference. Another mistake that Johnson says she sees among students — particularly Black students — is their desire to compensate for things they did not have or were not able to experience during their childhood.
“A lot of us grow up poor. The first opportunity we get to have a little money, we spend it on clothes and shoes because it’s something we always wanted but our parents couldn’t afford,” she explains.
This may also be the case with trips, vacations and gifts that would not necessarily be a wise allocation of student refund money.
Vanita Sanders, assistant director at the University of Michigan and college prep coach also offered her insight on the subject.
“I have been working with students in higher education for over 10 years and a common thread that I see amongst Black students is that they don’t come to college with a level of financial literacy that is needed when making adult decisions. Now just a couple of months prior to their freshman year of college they were raising their hand in class to use the bathroom and then they are thrust into a situation of making adult financial decisions. Most students are not prepared for such decisions,” Sanders said.
If Black students can avoid making these mistakes, they will do themselves a major financial favor. Stayed tuned for the next article, on how to repair credit mistakes.