College Seniors Ave. $4,100 in Credit Card Debtby Tim Manni
Along with their diplomas, many college students are graduating with debt. According to a study by Sallie Mae, the nation’s largest provider of student loans, the average amount of credit-card debt among graduating seniors rose to $4,100 last year from $2,900 in 2004. The study also found that nearly 85% of students have at least one credit card.
Why target college students? College-age students represent a credit-card company’s dream come true:
- Credit-card companies can establish brand loyalty at a young age
- Parents provide payment insurance, acting as a backstop if their child misses or stop payments
- Graduates typically find higher-paying jobs, allowing them to support higher balances
Sallie Mae said their study indicates that credit cards help students fill the void left by insufficient student loans. Everyday expenses like food and school supplies can easily be charged in what seems like a something-for-nothing purchase.
College students especially are easily enticed with free meals or other items like t-shirts in exchange for filling out card applications. When I went to college, the credit-card companies would “set up shop” in front of the cafeteria, absorbing the highest volume of traffic, giving out as many free sunglasses, CD cases, lunch bags, and t-shirts as the students could carry — as long as they filled out an application.
Some colleges like Washington and Hofstra University have even begun banning the presence of credit card companies on campus. Besides barring the companies from marketing on campus, schools need to increase their credit education.
Click here to take the credit-card IQ test.
Also, be sure to read Karen Blumenthal’s “Five Money Lessons for New College Grads.”