Study Shows College Students Have More Credit Card Debt
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The average college graduate is carrying a lot more than just student loan debt these days.
A new study from Sallie Mae shows the credit card debt for the nation's college undergraduates has increased by 8 percent since 2004. The study was conducted in the spring of 2008.
And the trend detailed in Sallie Mae's "How Undergraduate Students Use Credit Cards" is disturbing to some higher education officials in West Virginia.
"It's a problem," said Stephen Hensley, dean of student affairs at Marshall University. "I hope students will step back and exercise good judgment."
Getting credit cards today is far easier than it once was, Hensley said. He remembers when he used to work in the credit department at Sears.
"When someone came in, we'd check to see that they had a job, didn't have excessive debt and that they could repay the loan," he said. "In the intervening 30 years, that's changed. You can get a credit card with no apparent way to pay it back."
Once students have credit cards, they are hit with high interest rates and fees that could keep them in perpetual debt, Hensley said.
The Sallie Mae report indicates that the average credit card balances carried by undergraduates has increased since 2004, the last time the study was conducted.
The report shows the mean balance was $3,173, the highest in the history of the study. The median debt increased from $946 in 2004 to $1,645 in 2008. The study further shows that 21 percent of undergraduates had balances between $3,000 and $7,000.
Students also are getting their credit cards earlier in life, the study shows.
The number of freshmen who have credit cards before starting college increased from 23 percent to 39 percent. And according to the report, 15 percent of freshmen had no credit card balance, which is down from 69 percent in 2004. The median freshman debt rose from $373 in 2004 to $939 in 2008.
And the debt seems to be staying with them throughout college, the report shows. The average credit card debt for college seniors was more than $4,100, which is up from $2,900 in 2004. Nearly one-fifth of seniors had balances of more than $7,000.
But undergraduates are not just running up their credit card bills on frivolous items, Hensley said.
"It's not always on bar bills and pizzas," he said. "Sometimes, they're (charging) necessities of life."
The Sallie Mae report indicates that is true. According to the report, 92 percent of undergraduate credit card holders charged textbooks, school supplies and other educational expenses, which was up from 85 percent in 2004. Nearly 30 percent of students paid their tuition with a credit card.
But some students used their credit cards to live beyond their means, the report shows. Sixty percent of undergraduates said they were surprised at how high their balances had reached and 40 percent reported they had charged items knowing they had no money to pay the bill.
And 17 percent reported that they regularly paid off their credit card balances. Another 1 percent had parents a spouse or other family member pay off the balances. The remaining 82 percent carried their balances forward each month.
Marshall and other colleges and universities have taken steps in recent years to help students, Hensley said. The school once allowed credit card companies to set up tables in high-traffic areas of the Memorial Student Center to hand out applications. Now they are relegated to a room on the second floor. Most have stopped coming at all.
And Marshall has student legal aid workers and private attorneys who will do pro Bono work to help students needing credit advice.
The Sallie Mae report shows that 84 percent of undergraduates said they need more education on financial management. But classes offered at Marshall in the past are sparsely attended, Hensley said.
"We've had speakers come in to talk about debt, but nobody attends," he said. "Rarely do they want to talk about it."
The university does incorporate credit card education in it freshman seminar class, Hensley said.
The average college graduate is carrying a lot more than just student loan debt these days.
A new study from Sallie Mae shows the credit card debt for the nation's college undergraduates has increased by 8 percent since 2004. The study was conducted in the spring of 2008.
And the trend detailed in Sallie Mae's "How Undergraduate Students Use Credit Cards" is disturbing to some higher education officials in West Virginia.
"It's a problem," said Stephen Hensley, dean of student affairs at Marshall University. "I hope students will step back and exercise good judgment."
Getting credit cards today is far easier than it once was, Hensley said. He remembers when he used to work in the credit department at Sears.
"When someone came in, we'd check to see that they had a job, didn't have excessive debt and that they could repay the loan," he said. "In the intervening 30 years, that's changed. You can get a credit card with no apparent way to pay it back."
Once students have credit cards, they are hit with high interest rates and fees that could keep them in perpetual debt, Hensley said.
The Sallie Mae report indicates that the average credit card balances carried by undergraduates has increased since 2004, the last time the study was conducted.
The report shows the mean balance was $3,173, the highest in the history of the study. The median debt increased from $946 in 2004 to $1,645 in 2008. The study further shows that 21 percent of undergraduates had balances between $3,000 and $7,000.
Students also are getting their credit cards earlier in life, the study shows.
The number of freshmen who have credit cards before starting college increased from 23 percent to 39 percent. And according to the report, 15 percent of freshmen had no credit card balance, which is down from 69 percent in 2004. The median freshman debt rose from $373 in 2004 to $939 in 2008.
And the debt seems to be staying with them throughout college, the report shows. The average credit card debt for college seniors was more than $4,100, which is up from $2,900 in 2004. Nearly one-fifth of seniors had balances of more than $7,000.
But undergraduates are not just running up their credit card bills on frivolous items, Hensley said.
"It's not always on bar bills and pizzas," he said. "Sometimes, they're (charging) necessities of life."
The Sallie Mae report indicates that is true. According to the report, 92 percent of undergraduate credit card holders charged textbooks, school supplies and other educational expenses, which was up from 85 percent in 2004. Nearly 30 percent of students paid their tuition with a credit card.
But some students used their credit cards to live beyond their means, the report shows. Sixty percent of undergraduates said they were surprised at how high their balances had reached and 40 percent reported they had charged items knowing they had no money to pay the bill.
And 17 percent reported that they regularly paid off their credit card balances. Another 1 percent had parents a spouse or other family member pay off the balances. The remaining 82 percent carried their balances forward each month.
Marshall and other colleges and universities have taken steps in recent years to help students, Hensley said. The school once allowed credit card companies to set up tables in high-traffic areas of the Memorial Student Center to hand out applications. Now they are relegated to a room on the second floor. Most have stopped coming at all.
And Marshall has student legal aid workers and private attorneys who will do pro Bono work to help students needing credit advice.
The Sallie Mae report shows that 84 percent of undergraduates said they need more education on financial management. But classes offered at Marshall in the past are sparsely attended, Hensley said.
"We've had speakers come in to talk about debt, but nobody attends," he said. "Rarely do they want to talk about it."
The university does incorporate credit card education in it freshman seminar class, Hensley said.
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