sun-sentinel.com
Typically when people talk about "March Madness," they're referring to the NCAA basketball tournament.
But I want to discuss another March Madness. It's the madness that must afflict the thousands of college students who take Spring Break trips they can't afford.
I did a search on the Internet for spring vacation deals targeted at college students and was floored at the places these young people are traveling to -- Jamaica, the Bahamas, Cancun, Costa Rica, Miami, Las Vegas and South Padre Island, which is off the coast of Texas.
I know two-income couples who have full-time jobs who haven't been to some of these vacation spots. And yet college students with little or no savings, considerable student loan debt and perhaps unpaid credit card balances are taking off for fun in the sun.
National Lampoon Tours, a division of the company famed for Animal House and National Lampoon's Vacation movies, began this year offering all-inclusive trips to Las Vegas and Cabo San Lucas, Mexico. One Spring Break package included a four-night stay at a four-star hotel and airfare from Los Angeles to Cabo San Lucas. The cost: $860. Of course, that doesn't include spending money and maybe a roommate, but come on.
Rather than spend $860 for a four-day vacation, what could a college student do with that amount of money? Buy all their books for the year, perhaps? On average, students spent $898 for textbooks last year, according to the California Student Public Interest Research Group.
Unless all of these young people taking Spring Break trips are getting a free ride to college and won't have a financial worry in the world about paying for their books, fees, clothes, or transportation to and from school, they ought to be vacationing at home.
Am I making too much of this March Madness?
Not when you look at the massive amount of debt students (and their parents) are taking on to pay for a college education. Not when you look at survey after survey of the growing number of college students racking up a maddening amount of credit card debt.
Trust me when I say that young people flying or driving off for vacations they can't really afford are exhibiting behavior that will set them up for a lifetime of, "I want what I want when I want it."
Here's what one freshman student planning on vacationing in Miami said to me: "When exactly do you expect me to have fun? I am young and will only be this way for a little while longer. I have learned a lot about sacrificing and responsibility. I do understand that going to Miami may not be a wise decision but I have rationalized the decision."
I couldn't get this young woman, who is funding her education largely with student loans, to see that her reasoning was flawed. She rationalized that because she had paid cash for the trip, she therefore could "afford" to take a break.
But it doesn't matter if you are paying cash for a luxury item if you have consumer (or in this case, student loan) debt. Any money you have to spare -- say for a vacation -- should be applied to that debt or saved for necessities. Now that's sacrificing for your long-term financial well-being. That's the responsible thing to do whether you're young or old.
I'm not saying college students have to live like monks and deny themselves all worldly pleasures. But the time to party is when the bills are paid.
Let's suppose a college student who had $860 to spend on a vacation to Cabo San Lucas instead saved that amount every year for 10 years. At a rate of return of just 2 percent, compounded monthly and taxed at a marginal rate of 28 percent, he would end up with $10,178. That's a good chunk of change that could be used to buy a car or go toward the down payment on a home.
Now what if that student instead put that $860 Spring Break vacation on a credit card with an interest rate of 18 percent and he only made the minimum due payment of 2 percent. It would take him almost 17 years to pay off that debt. In that time he would have paid more than $1,500 in interest (don't scoff, this happens all the time).
I know college can be tough. Yes, many students work hard and could use some fun time. But they better learn now that they aren't entitled to that fun at the expense of handling their personal finances in a mature way. It's vital that they stop the madness (not just in March) and learn to spend wisely in their youth. As Tennessee Williams wrote in Cat on a Hot Tin Roof, "You can be young without money but you can't be old without it."
Typically when people talk about "March Madness," they're referring to the NCAA basketball tournament.
But I want to discuss another March Madness. It's the madness that must afflict the thousands of college students who take Spring Break trips they can't afford.
I did a search on the Internet for spring vacation deals targeted at college students and was floored at the places these young people are traveling to -- Jamaica, the Bahamas, Cancun, Costa Rica, Miami, Las Vegas and South Padre Island, which is off the coast of Texas.
I know two-income couples who have full-time jobs who haven't been to some of these vacation spots. And yet college students with little or no savings, considerable student loan debt and perhaps unpaid credit card balances are taking off for fun in the sun.
National Lampoon Tours, a division of the company famed for Animal House and National Lampoon's Vacation movies, began this year offering all-inclusive trips to Las Vegas and Cabo San Lucas, Mexico. One Spring Break package included a four-night stay at a four-star hotel and airfare from Los Angeles to Cabo San Lucas. The cost: $860. Of course, that doesn't include spending money and maybe a roommate, but come on.
Rather than spend $860 for a four-day vacation, what could a college student do with that amount of money? Buy all their books for the year, perhaps? On average, students spent $898 for textbooks last year, according to the California Student Public Interest Research Group.
Unless all of these young people taking Spring Break trips are getting a free ride to college and won't have a financial worry in the world about paying for their books, fees, clothes, or transportation to and from school, they ought to be vacationing at home.
Am I making too much of this March Madness?
Not when you look at the massive amount of debt students (and their parents) are taking on to pay for a college education. Not when you look at survey after survey of the growing number of college students racking up a maddening amount of credit card debt.
Trust me when I say that young people flying or driving off for vacations they can't really afford are exhibiting behavior that will set them up for a lifetime of, "I want what I want when I want it."
Here's what one freshman student planning on vacationing in Miami said to me: "When exactly do you expect me to have fun? I am young and will only be this way for a little while longer. I have learned a lot about sacrificing and responsibility. I do understand that going to Miami may not be a wise decision but I have rationalized the decision."
I couldn't get this young woman, who is funding her education largely with student loans, to see that her reasoning was flawed. She rationalized that because she had paid cash for the trip, she therefore could "afford" to take a break.
But it doesn't matter if you are paying cash for a luxury item if you have consumer (or in this case, student loan) debt. Any money you have to spare -- say for a vacation -- should be applied to that debt or saved for necessities. Now that's sacrificing for your long-term financial well-being. That's the responsible thing to do whether you're young or old.
I'm not saying college students have to live like monks and deny themselves all worldly pleasures. But the time to party is when the bills are paid.
Let's suppose a college student who had $860 to spend on a vacation to Cabo San Lucas instead saved that amount every year for 10 years. At a rate of return of just 2 percent, compounded monthly and taxed at a marginal rate of 28 percent, he would end up with $10,178. That's a good chunk of change that could be used to buy a car or go toward the down payment on a home.
Now what if that student instead put that $860 Spring Break vacation on a credit card with an interest rate of 18 percent and he only made the minimum due payment of 2 percent. It would take him almost 17 years to pay off that debt. In that time he would have paid more than $1,500 in interest (don't scoff, this happens all the time).
I know college can be tough. Yes, many students work hard and could use some fun time. But they better learn now that they aren't entitled to that fun at the expense of handling their personal finances in a mature way. It's vital that they stop the madness (not just in March) and learn to spend wisely in their youth. As Tennessee Williams wrote in Cat on a Hot Tin Roof, "You can be young without money but you can't be old without it."
arty: party
ffice
