Student Credit Card Debt: A Survival Guide for Students
College is the last care free step before real life begins, or at least it should be. Students should be able to go to sleep each night with the only pressing responsibility being the English exam tomorrow morning.
PR9.NET December 10, 2005 - College is the last care free step before real life begins, or at least it should be. Students should be able to go to sleep each night with the only pressing responsibility being the English exam tomorrow morning. They should still get to live in a world where although they can't afford much more than the occasional late night drive through Taco Bell or downloading the latest hit single, at least they aren't worrying yet about paying a mortgage, most forms of insurance, utility bills, or the college loan that is allowing them to get an education.
Unfortunately, for many college students this is not the case. Many are already burdened with financial pressure because they are accruing credit card debt, in some cases over $7,000 worth of it. Increasingly, students are even coming to campus with credit card debt in hand. Consolidated Credit Counseling Services Inc. reports that 20% of freshman got their credit card in high school and nearly 40% sign up for one in their first year at college. With the abundance of on-campus, mail and Internet card offers giving low introductory rates, freebies, and bonus airline miles, it's not surprising to find that according to a 2001 Nellie Mae study 83% of all undergraduate students have at least one credit card and carry an average balance of $2,327.
The problem of high credit card debt has many implications for a student. Some end up dropping out of college all together so they can work full-time just to pay credit card bills. If they are able to stay in school, but have in the process ruined their credit rating, it can affect their ability to rent an apartment, afford insurance and even get the job that will help them to pay off their debt. Even relationships suffer as a result of financial stress. There is also a psychological affect on students. The stress can lead students into depression, and in a few cases has been a contributing factor to suicide.
Of course it hasn't always been like this. According to Dr. Robert D. Manning, Professor at Rochester Institute of Technology and author of Credit Card Nation, in the late 1980s student credit card limits were around $300-$500 and parents were required to co-sign. But when credit card companies began making a lot of money during the 1991 economic recession, they started looking for new markets and found it in the student population. Issuers dropped the co-signing requirement and started raising limits, which, when combined with parents' increasing financial pressures and higher costs of education, gave students a way to fund themselves through college.
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