Debt basics: What students need to know

Lorna Wounded Head is the Family Resource Management Field Specialist at SDSU.

Lorna Wounded Head is the Family Resource Management Field Specialist at SDSU.

Lorna Saboe-Wounded Head, Family Resource Management Field Specialist, SDSU Extension

Debt is often considered a negative financial issue. It is important to recognize that not all debt is bad. For example, student loans are an investment in yourself, and a home mortgage helps with acquiring assets and building net worth. Credit card debt that has not been an investment in an asset can be a financial burden.

No matter what type of debt or how much it is, having a repayment plan is important. Over time, the compounding interest rate can make the debt very expensive. Here are 3 tips to manage debt while you are in college.

Be intentional

If you choose to acquire a loan or use credit, be intentional about why and what you will use the money for. Student loans are easy, the money will be used to complete a college degree. 

That doesn’t mean that you should borrow as much as you can and not consider the amount. Borrow only what you need by figuring out how much money you need. Consider financial options that don’t involve borrowing (scholarships, grants, savings, earned income), then determine how much to borrow.

Debt is a future obligation for your income

Any type and amount of debt that you secure means that you are designating future income to pay the debt. Student loans give you some time, and other types of debt usually mean a payment next month. If a credit card purchase is made today, a portion of next month’s paycheck is obligated to pay the bill. 

Consider the trade-off

Borrowing money for college can mean that you don’t have to work (or work as much) during the semester. It can mean that you can take the extra course to stay on track for graduation, or it can mean many other things to you. The trade-off may be something you gain or something you lose. Think about what that debt will either allow you to do or not have to do now and in the future.

When considering to use debt now and throughout your life, think about the asset you are acquiring and whether the cost of the debt will be worth the expense. Track the amount of debt you are using and make a plan for paying the debt.

For more information about managing your finances, go to SDSU Extension Family Finances ( If you would like assistance in managing your finances, contact Lorna Wounded Head ([email protected]).