Gain a head-start before debt piles up

As the class of 2021 prepares to leave for college, careers, or a gap year, personal finance becomes a topic of increasing importance. While parents and school provide a helpful support structure, students should make an effort to learn responsible financial practices before accruing debt.

Less than a fifth of high school graduates feel comfortable with the concept of credit, according to a 2019 poll. However, by the age of 24, the average adult will owe over $10,000 in credit card bills, car payments and other forms of consumer debt. College graduates can expect even more debt: on average, graduates from private for-profit schools owe $39,900, for University of California, $20,000, and for California State Universities, $15,000.

Even if parents are willing pay for housing or tuition through college via the ParentPlus option via the studentaid.gov website, the financial choices young adults make leave long-lasting effects. The earlier one gains a grasp of personal finance, the fewer economic woes they may face in adulthood.

Both students and parents should consider the ramifications of loans for their immediate and long-term choices.

Take student loans as an example. Nationwide, the average time to pay off college aid loans is 18.5 years. Attending a more expensive college for the wrong reasons may cause one to miss out or delaying owning a house, car, or starting a retirement fund early in life.

Despite the impact a quarter million dollars of debt can have, a study shows only 10% of college students can correctly name the amount of debt they owe. Before attending a university, students should use a student loan calculator such as the one on studentaid.gov.

Students in Robert Foshee’s economics class work on a budgeting project early in the second semester. One lesson seniors often draw from this project is realizing the amount of work and proactive planning required to balance a monthly budget.

High schoolers should also apply financial lessons in the real world. While only 30% of 18-24 year-olds own a credit card, applying for a credit card early can allow students to build a positive credit score, aiding in buying a home later in life. Educational Employees Credit Union offers a student starter card for high school seniors and college students.

With few expenses, support from parents and little-to-no debt, the economic stakes are low for high schoolers. However, students who implement wise financial decisions early start their adult life with a leg up.

For more articles, read COLUMN: Student body president shares student leadership purpose and Amanda Phan leads international organization, creates community among Vietnamese students.