Credit Card Debt on the Rise as Students Struggle to Pay for College Expenses

Credit Card Debt on the Rise as Students Struggle to Pay for College Expenses
Credit Card Debt on the Rise as Students Struggle to Pay for College Expenses
The effects of the current economic downturn are long reaching. As families continue to cut costs and save money to make it through tough times, college students are turning to credit cards to help fund their college education.

According to a study released yesterday by Sallie Mae, eighty-four percent of undergraduates had a least one credit card (survey results are from spring of 2008) which is up from seventy-six percent in 2004. Half of all college students have four or more credit cards at the time of the survey.

It appears college students are carrying more credit cards and higher balances as they use credit cards to pay for textbooks, computer costs, school supplies and tuition. In addition to traditional expenses associated with college the highest ranked “other” expenses are food, clothing and cosmetics.

Like so many people, sixty percent of college students are surprised by how much money they owe. This is a common reaction for individuals that use their credit card for day-to-day expenses without properly tracking the amount of money they have charged. Parents are not footing the bill either, with 82% of college students paying their own bill each month. Only 17% reported paying the balance in full each month which means a larger percentage of students are incurring finance charges each month.

As college costs continue to rise, more students are facing the daunting task of trying to pay their expenses and keep their credit history clean. College seniors graduating in 2008 had on average $4,138 in credit card debt which is up 44% from the 2004 study. This situation will likely continue to get worse as private lenders are less inclined to loan money during the current economic climate which has certainly only worsened since the time this data was collected. This can potentially result in college students paying even more for their education once you tack on interest rates and the high cost of graduating college with credit card debt.

So what advice is out there for college students who want to avoid the credit card debt trap? Start by having a budget and sticking to it. If you are racking up charges on your credit card you must know how much you are spending and on what, as well as how much money you have coming in to pay these expenses. Once you have this information you can review your expenses and look for ways to cut costs or eliminate needless spending. It may seem like a bit of a sacrifice today but in reality you are preventing years of financial struggle by keeping your debt under control.

College students are adults and like all other adults, struggling with high interest credit card debt limits your ability to reach your financial goals. The best way to avoid this is by using your credit card responsibly, paying off your balance each month and living within (or below) your means.

Trisha Wagner is a freelance writer for where you can compare rates of deposit accounts from dozens of banks in one place. Trisha also writes regularly on the topics of personal finance and savings accounts.

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