Don't make this money mistake with your student loans, warns Michelle Obama

Sarah L. Voisin/The Washington Post | Getty Images

In July, as part of her Reach Higher Initiative, former first lady Michelle Obama cautioned a group of first-generation college students against using student loans for spending that doesn't further their education. When you get your student loan check, she says, "you don't have extra money. It might feel like extra money, but it's not."

Obama was speaking at the fifth annual Beating the Odds Summit held at Howard University in Washington, D.C.

Helping your family pay bills is a good cause, she told the crowd, but it's not a smart way to use your student loans. "It's tempting to think that [student loan] money is yours and that you can use it to help everybody," Obama said, but ultimately, "you'll still owe the money."

Student loans are meant to cover traditional college expenses like tuition, textbooks, and room and board. But many undergraduate borrowers end up taking out more money than they need to.

Nearly half, 48%, of undergrad student loan borrowers say they could have borrowed less and still paid for college, for example, according to a 2017 survey of 2,049 U.S. adults conducted by Harris Poll for NerdWallet. And other reports have found that it's not unusual for students to put loan money toward nonessentials like spring break trips and dining out.

Your student loans are to help you get through college and "finish this journey," Obama pointed out, so keep your focus on that: "You are not in a position to save anybody right now."

Former First Lady Michelle Obama speaking at the fifth annual "Beating the Odds" Summit on July 23, 2019, at Howard University.
Sarah L. Voisin/The Washington Post | Getty Images

The cost of over-borrowing

Educating yourself about the long-term effects of taking out loans on your finances can help to better manage your loan repayment obligations later on. A 2017 Student Loan Hero report pointed out that paying for a pizza every Friday night of the academic year works out to $1,800. If you pay with student loan funds, the cost of borrowing jacks up that total to $2,291.02.

Create a financial plan to map out school expenses. Work with an advisor, if necessary, to make sure you're only taking out what you need. Shift your focus to money that you won't have to pay back, such as scholarships and grants, and to earning more, if necessary, by way of campus jobs or side hustles. Your future self will thank you.