Nevada County Picayune and Gurdon Times Newspaper Archive

'Credits' Could Haunt College Students

A few years ago when students left college with "credit" most parents were happy. The definition we knew for "college credit" was a student's successful completion of a course of study. Today's college students are leaving campus with another type of credit  the kind they will be paying back for years to come.

Results of a national survey reported by Lynn Russell, family resource management specialist, Cooperative Extension Service, University of Arkansas shed light on how students use credit cards.

Sixty-four percent of college students have at least one credit card; 14 percent have four or more credit cards; 75 percent use their cards for routine personal expenses such as food, clothes, toiletries and entertainment; 55 percent got their first card as a freshman; one-fourth of college students got their first card in high school; and 63 percent applied for the first card on their own.

Visit a college campus and you will find students bombarded with opportunities to sign up for credit. Bulletin boards are filled with application forms. Bookstores display credit card posters and free tee-shirts, candy, sunglasses and other gifts are offered just for completing a credit card application.

Offers look good  low interest rate, low monthly payments and no annual fee. But what students fail to see is that the low introductory interest rate may last for about three months  about the time they reach their limit by charging nonessentials to their new card. Once a higher interest rate goes into effect, it is increasingly difficult to pay the minimum monthly payment.

The college credit card market is booming. Fewer than ten banks were involved in the college market in 1990, and only half of the nation's 15 million students carried credit cards, with an average balance of $900. Today, 40 major banks battle over college students, 65 percent of whom carry plastic. The average balance is $2,100, with one-fifth carrying debt of more than $10,000.

Card debt imposes a great deal of financial strain on students. Psychological problems resulting from debt may be a more severe problem. Teens have committed suicide after admitting to having no idea how to get themselves out of their financial mess.

Young adults goof to college hoping they will acquire knowledge and skills to earn a good income. They may leave with more than a diplomamany leave with massive credit card debt.

What can be done to correct the problem? If you have a college student, talk about wise use of credit. Ask college administrators to give financial education to their students if they continue to allow aggressive card marketers on campus and accept subsidies. These things may not eliminate the problems, but they may help.

For more information on credit, contact the Clark County Extension office at 246-2281.