Credit card debt a big concern on college campuses
Reading, writing, credit cards? Among the things they don't teach you about in school, but probably should, is credit card debt. Credit card debt is a major concern among college administrators, wfho worry about the effect owing money to credit card companies can have on students. In 2004, 83 percent of undergraduate college students had at least one credit card in their name with an average outstanding balance of over $2,300. Student credit cards often carry high interest rates following a very short intro APR offer, usually lasting about six months. As a result, these cards make it easy for their cardholders to fall into debt. Aside from just costing young people serious wads of cash, credit card debt can have some other serious negative effects on college students.
Those college students who carry major credit card bills could see their GPAs suffer. There is a tendency for young people who owe card companies large amounts to get lower grades. Also, students end up working more (seemingly related to the large credit card bills), are more depressed, and are more likely to end up college drop-outs when they shoulder sizable credit card debt.
Since debt that isn't paid off remains with a cardholder, problems continue for students with sizable credit card debt even after they graduate. College graduates with bad debt on their records may find it tougher to get a job, as employers often take a look at credit histories. These indebted individuals can also run into difficulty getting a home loan or going on to graduate school.
Graduates with lingering credit card bills are often more likely to seek out higher paying jobs in order to pay off their debt, meaning many talented individuals avoid lower paying (but important) professions such as being teachers of working at nonprofits, for instance.
Still, combining students and credit cards is not always a bad thing for the parties involved. Studies show that 50 to 60 percent of college students (or their parents) pay off their credit card balance in full every month, so many students graduate without incurring credit card debt. Meanwhile, credit card issuers continue to target students because they represent a better security risk than many other consumers. That is because young people at institutions of higher learning have their parents to come to the rescue when they get in deep with credit card debt -- even if the parents are not legally obligated to pay. Credit card issuers also like to get their plastic into the hands of young people due to the potential for long-term loyalty, as college students often hold on to their first credit card for years. Additionally, universities (despite concerns over possible student credit card debt) stand to earn money from students' use of college affiliate credit cards.
Experts recommend that parents prepare their children to have credit cards well before they leave for college. Students with credit cards should be sure to always pay their credit card bills in full and on time, as only making the minimum payments for four years can cost you in more ways than just monetarily.
CreditCards.com offers a variety of student credit cards, a number of which provide 0 percent APR for an introductory period, giving students time to pay off their bills. Some of the student credit cards feature cash back offers, online account management or other great features young people will love.
Published: August 25, 2006
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