Freshman Center
First-Year Insight
Fall 1998
Extra Credit Your Student Doesn't Need
To their families, new college students may represent years of hard work, nurturing, and love. Their professors may see them as future scholars, scientists, doctors, or business leaders. But to credit card marketers, new college students are the high wage earners of tomorrow, and the sooner they become credit consumers, the better.
According to a 1996 CNN report, the typical college student receives an average of 20 Credit card applications each semester. Promising easy money (a co-signer is not necessary in most cases), along with bonuses such as discounts for travel and dining, and free magazine subscriptions, the offers are tempting, and many students give in to that temptation.
A recent study by the Nellie Mae Foundation, which finances tuition loans, found that 67% of undergraduates have credit cards, and 27% report having four or more. The average credit limit for college students is $4661 per card, and the average credit card balance is $1879.
If these figures don’t alarm you, consider the number of students who leave college with both student loans and consumer debt. A recent survey of college graduates who had received student loans, 97% of respondents reported having amassed non-education debts while in college, with an average monthly payment of $1000.
"Too few students really understand the importance of using credit responsibly," according to Suzanne Boas, president of Consumer Credit Counseling Servie, an Atlanta based non-profit organization that helps individuals manage debt. "At CCCS we see students who have accumulated thousands of dollars in debt using credit cards to pay for school, living expenses, and entertainment."
Of course, credit cards can be useful for covering emergency expenses and as protection against cash theft, acknowledges CCCS representative Norma Tharpe, but the same benefits can be obtained with a debit card, which doesn’t bring with it the temptation to spend beyond one’s means.
The decision of whether or not to have one credit card, or four, and how to manage that responsibility, ultimately rests with each college student. Parents can help students make good decisions however, by talking with students about financial responsibility, giving students a realistic picture of the financial burdens they’re likely to face after college, and, of course, by demonstrating responsible credit management themselves.
No doubt, most students discussed money matters with their families before they left for college. Perhaps Fall Break would be a good time to revisit the topic.