College students should borrow as much money as they can get their hands on. It's possible to take out student loans now from Sallie Mae at around 3% interest or less, and you don't need to make any payments until you graduate. I know several beginning freshmen who are wary of going into debt, but there are many compelling reasons to do so.

First, borrowing money at 3% is literally free money. You can drop it in a mutual fund until you graduate, pay the loan back, and keep all the capital gain for yourself. Even if you're afraid the stock market is going to crash again, you could make money on 5 year treasury bills (remember, no payments until graduation, and often no interest).

Second, the time of an average college freshman is worth little more than minimum wage. Some 19-year-olds I know are working two jobs, day and night, for a couple hundred bucks a week, rather than borrowing money and working one job. It hurts their performance at school, and leaves them perpetually tired and busy. If they were to borrow a few thousand dollars a year, the payments they would eventually have to make on the loan would be trivial -- their salary after graduation will be substantially higher than minimum wage.

Both of these factors are caused by the difference between the value of the time of a high school graduate, and the value of the time of a college graduate. To an employer, the time of a college graduate is worth far more than the time of a high school graduate; to the student in question, their time is best spent on their highest priority activity -- school, and then work after graduation. By borrowing money, the student can trade an hour in the future for 2, 3, 4, or more hours in the present.

Such trades could lead to better performance at school, more leisure time, a better social life, and any number of other benefits that may even translate into higher earning potential in the future. What's more, the student could die before graduation, thereby gaining full use of this extra time without paying a penny for it.



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