Graduate students now average $8,216 in credit card debt, according to a new survey, which also says students wish they had learned earlier about handling money.
The survey was released in September 2007 by Nellie Mae, an originator of federal and private education loans and a leader in debt education and financial management for students.
“Graduate students are apparently doing what the rest of the nation is doing: using credit cards to sustain their lifestyle,” says Gail Cunningham, vice president of business relations for Consumer Credit Counseling Service of Greater Dallas.
Her advice is to charge no more than can be paid off when the bill arrives.
“I realize this is easier said than done, but doing otherwise often results in starting a professional career thousands of dollars, or tens of thousands of dollars, in debt,” Cunningham says.
Marie O’Malley, spokeswoman for Nellie Mae, the nation’s largest maker of student loans, advises students to charge only what they can afford on credit cards, make payments on time and always pay more than the minimum required. She also suggests paying for big-ticket items such as tuition with student loans at lower rates and easier repayment options.
The study, “Graduate Students and Credit Cards in 2006: An Analysis of Usage Rates and Trends,” suggests that:
• The more time spent in graduate school, the more likely a student is to grow his or her credit card debt level. On average, older graduate students (aged 30-59) carry $12,593 in credit card debt, almost twice as much as their younger counterparts (aged 22-29) who carry an average debt of $6,479.
• Only 20 percent of all grad students pay off their monthly balances.
• The average outstanding balance on credit cards held by graduate students rose 10 percent since 2003 from $7,831 to $8,612.
• Ninety-four percent of graduate student survey respondents used credit cards to pay for some portion of their direct education expenses, primarily textbooks. Twenty-eight percent admitted paying for part of their tuition with credit cards.
• Ninety-three percent of grad student respondents would have liked more information on financial management topics before they started school and would like financial management education now.
• The percentage of graduate-level students who have at least one credit card decreased only slightly in the past three years (from 96 percent to 92 percent).