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College Credit Card Debt

The two phrases: college students and credit card debt are virtually synonymous these days. With the recent dilemma that is currently going on with education increasingly becoming too expensive, especially here in California where they are planning to cut back on Cal grants and other funds in order to decrease the State’s deficit, its know wonder why thousands and thousands of college students across the country are falling prey to the world of credit card debt. Credit card debt is a never-ending problem across college campuses in the United States. While many students do manage credit without having any problems, there is a considerable amount of college students who do get into debt one way or another.

Credit cards have become a fact of life on college campuses. College students represent a vast market for credit card companies. It never seems to fail that at some point throughout the year at any college campus you attend, you are going to find a booth or a table set up with some representative of a major credit card company asking you if you would like to receive an item for free. “Credit card issuers ply college students with offers of free T-shirts, Internet access and other goodies, just for opening an account.” (Block) Thanks to some of these marketing incentives, the percentage of college students owning and using credit cards increased considerably. “The percentage of college students using credit cards increased from 67% in 1998 to 83% in 2001.” (USA Today, p01a) A study, also done by USA Today two years ago, resulted in the average amount of credit card debt owed by grade level. Freshmen owed an average amount of $1,533, sophomores owed an average of $1,825, juniors owed an average of $2,705, and finally the seniors, who in our survey owed the most among the other grade levels, took the crown with $3,262. Regardless of how and why college students end up owning credit cards, the reasons for falling into debt are to some extent understood. For some students credit cards maybe their only means to pay for their education.

Other students may get into debt because of the assumption that they will easily get out of debt once they graduate from college and get their dream job. But really, I don’t know of any student who would want to get a good paying job and use most of what they earn towards paying off their credit card bills. Take for example Barrett Kaiser, a student who was interviewed by Margaret Mannix of U.S. News and World Report, he recalled back to his freshmen year at the University of Montana where he received his first credit card even though he had no job or credit history. He began buying new shoes, CDs and drinks at the bar for all his friends. Before he knew it, he had reached his credit limit of $2,000 and has stayed there ever since. Kaiser at one point considered to drop out of school and work full time to pay off his debt.

Important issues that were not researched in our project were the consequences that could result from the pressure of having this expensive habit and the different tips that could be taken by students in order to help them with credit management. A number of student suicides have been linked to credit card debt. “In 1999, Sean O’Donnell committed suicide at the age of twenty-two when he found himself owing $10,000. He took on two jobs while attending college, trying to get his bills under control. Nonetheless, the burden of trying to get out of his financial mess took its toll on him. His parents were appalled at the fact that he had gotten himself into so much debt.” (Mannix, p89) Credit card debt can also lead to less tragic consequences. “Late payments and delinquencies will tarnish a student’s credit report, which can affect his or her ability to land a job or go to graduate school. Many employers look at the credit reports of potential employees, while at the graduate level most of the students rely on loans to pay for their tuition. Without an outstanding credit report, it is quite near impossible to get the proper finance to pay for your schooling.” (Mannix, p89)

Not owning a credit card isn’t necessarily a good thing. If you ever plan on asking for a loan in order to buy a car or purchase a home, “Potential lenders look at how you’ve managed credit when determining whether to lend you money or not.” (Block) If you do plan on owning a credit card, it’s preferred that you own multiple cards. One should be for everyday expenses and the other for emergencies. “Ideally, your emergency card should have a low interest rate, because you may have to carry a balance. Carrying a balance can actually enhance your credit rating because it shows lenders you can manage debt responsibly.” (Block) Other tips that can help guide students with their credit card debt include: keeping your credit limit low, declining any offers informing you that your credit limit has been increased, and always asking for a copy of your credit report in order to check for mistakes.

Student consumer debt is not a problem that will easily go away from one day to the other. Everyone from students, parents, government and school officials must work together in order to identify and implement the best practices. We hope that from the survey project that we conducted here in Cal State San Marcos and the information that we ended up discovering through our data, could to some extent shine a light on this ongoing issue.

1 > College Student Credit Card Debt - Executive Summary
2 > College Student Credit Card Debt - Introduction
3 > College Student Credit Card Debt - Methodology
4 > College Student Credit Card Debt - Amount Owed by Grade
5 > College Student Credit Card Debt - Purposes for Credit Card Usage
6 > College Student Credit Card Debt - Amount Owed by Grade Percentages
7 > College Student Credit Card Debt - Financial Assistance
8 > College Student Credit Card Debt - Male vs. Female
9 > College Student Credit Card Debt - Male vs. Female Purposes
10 > College Student Credit Card Debt - Best Predictors for Amount Owed
11 > College Student Credit Card Debt - Pay in Full or Pay Minimum
12 > College Student Credit Card Debt - Living Status Correlation
13 > College Student Credit Card Debt - References


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