"To me, it's not the proper use, but taxpayers aren’t necessarily being ripped off by a small number of students who are mismanaging their money," Draeger said of students who use loans for vacations. "Federal loans and private education loans get repaid. I’m not saying it’s not a problem, but if we overreact to the problem, I’m not sure we create any real solutions. The whole idea of student aid is to get people who would otherwise not have attended into college. If we put too many barriers up, we squeeze out those at-risk, on-the-fringe students."
For students dead set on a spring break blowout, or just a trip to Señor Frogs, the options are usually to take a part-time job, plead with relatives for spending money, swipe a credit card, or use a portion of the loan disbursement check. In the absence of a gig or a wealthy grandma, the kids are left to pick between two kinds of debt.
"If taking on a little bit extra in student loans means they get to live the life they want to live and be a happy person, then it can be worth it," said Erik Almon, director of financial planning at the Society of Grown Ups, a Brookline, Mass., financial literacy group. Almon stressed that students should plan their post-graduation payback plan in detail and, if at all possible, refrain from taking on high-interest credit card debt.
"Using student loans is a smarter decision. It gives you more flexibility if you do find yourself stretched to make payments. There are a lot of payment plans that give you flexibility and help you get by after graduation," he said.
As a senior, Almon was given a loan check of $1,500. He took a third of it and planned a spring break vacation.
"When I got out of school, those first couple years, working and paying down those student loans...it was kind of painful," he said. "Even though I was making some sacrifices to pay that money back, I do not for one second regret that money I spent to go to Cancún."