Editor’s note: This is the second in a two-part series analyzing the financial perils of borrowing and credit. Wednesday’s story focused on payday loan and rent-to-own services. Today’s story looks at student loans and how they can be misused.

Student loans, a common way to pay for college, can lead to trouble for students who borrow irresponsibly, said Mark Oleson, director of the ISU Financial Counseling Clinic.

“No one is asking what is wrong with our student loan program,” Oleson said. “Students think their student loans are a wild card they can pull out when they get in trouble.”

He said a reasonable debt load for a graduating student is between $15,000 and $18,000. This is assuming the student has no financial help from his or her family, is working part time and has only federal loans.

“College is a chance for students to get used to real life, but students who get help from their parents often get $200 to $300 in spending money, which is just not realistic,” Oleson said. “Instead of being exposed to real life, parents expand the bubble.”

Doug Borkowski, financial clinic counselor, said many students rack up $2,000 in credit card debt every year they are in school and use student loans to pay it off.

“By the time they graduate, they have $8,000 in extra student loan debt plus $2,000 on their maxed-out credit card,” said Borkowski, graduate student in human development and family studies.

Oleson said a problem students have is expecting the financial aid department to tell them when they are borrowing too much.

He said he consulted with a student in Spanish who had to drop out of school because she had $70,000 in debt. Oleson said the student had maxed out her credit cards, her parents had gone bankrupt and she was ineligible to borrow any more for her degree.

Now, he said, with her degree nearly complete, she will be forced to work a low-paying job to pay off her loans. Oleson said that student would have been much better off not going to school in the first place.

“I can make a poor investment in education just like I can invest in Enron,” Oleson said.

Borkowski said Iowa State offers programs for students to learn how to manage their finances. He said every semester a class called “Financial Survival” is offered.

He said there is also a seven-week course called “Creating a Financial Path to Graduation.” Both courses are offered through the human development and family studies.

“Brigham Young University, which had the lowest student loan default rate in the country, started a program to guide students in responsible borrowing,” Oleson said. “They went from a 1.5 percent default rate to 0.3 percent in two years.”

Oleson said the programs he offers through Iowa State are based, with permission, on Brigham Young’s program.

“I talked to a student and her parents yesterday. Using this program, she found that she will only need to borrow $3,000 over the four years she will be in school,” Borkowski said.