While the average credit card balance among college students has dropped seven percent since 2001, 75 percent own credit cards, averaging more than $2,100 each in credit card debt annually. According to the most recent statistics released by student-loan lender Sallie Mae in May 2005, the average credit card debt per college student has dropped from $2,327 in 2001 to $2,169 through 2004.
However, USA Today reported this decrease stemmed from parents, who are now educated on credit card issues, protecting their children against potential dangers. It is possible this decline could also be attributed to students transferring their credit card debt to student loans, which have risen dramatically recently while credit card debt has begun to decline.
According to Dr. Eugene Dial, vice president for student affairs and enrollment services, credit card debt is more common among college students because they have not developed solid budgeting skills or the self discipline that accompanies it.
Excluding rent, textbooks and tuition, among other things, Sallie Mae and The Washington Post reported students have used credit cards for various purchases such as alcohol, cosmetics, clothing, music, spring-break trips and bets on NCAA brackets.
All this just to keep up with the Joneses. But, according to John Lajaunie, professor of finance, the Joneses aren’t doing so well either: “The Joneses don’t have any more than you do. You’re both up to your eyes in debt.”
While students may apply for credit cards for a free T-shirt or slice of pizza used as enticements by credit card companies but do not plan to use the card, Dial said applying for too many cards can negatively impact students’ credit ratings.
“There could be a tremendous impact on students that they won’t realize until they get out (of college) and apply for a job or apply for a (loan for a) house,” Dial said.
Still, some colleges are profiting from credit card companies soliciting students on their campuses. According to USA Today, the United States’ largest four-year colleges through its athletic or alumni associations release students’ contact information to banks that issue credit cards, earning millions of dollars annually from the banks for allowing them to market on their campuses.
“They want your business now because most people are creatures of habit,” Lajaunie said of companies’ targeting college students. “(If) you got a VISA card now, you’re going to have a VISA card when you’re older when your spending capibilities are much greater; they’re booking for future business.”
Dial said Nicholls does not sell students’ information to credit card companies. In fact, the University was one of the nation’s first colleges to restrict credit card solicitation.
“They used to want to come two or three a day, and it gets to a point where it interferes with the regular operations of the campus,” Dial said.
The University’s guidelines restrict specific commercial and outside vendors’ access to one reservation per year while each vendor category or type is limited to two days in October and two days in March. While they can distribute informational brochures, credit card companies are still required to provide their customers with information concerning problems related to excessive financial debt before the customers fill out an application.
Additionally, the companies, which can only distribute their materials in the Bowie Room in the University’s student union, cannot give students “freebies” as enticements.
While credit cards can burden students with debt, they can also be advantageous. Lajaunie said credit cards provide access to money in emergencies and allow for easier and safer transactions.
Additionally, they can be shut down if lost or stolen, preventing further loss. Credit cards are also needed to establish credit, experts said.
Despite the potential problems involving credit cards, Lajaunie is not opposed to their use among college students.
“(It’s okay) if they are mature enough to handle it,” Lajaunie said. “Every parent owes their child a good education in personal financial management.”
Lajaunie also advises his finance classes about consumer personal debt and how it affects peoples’ investment capabilities. In fact, the first lecture in his Finance 456 (Analytics of Investing) class involves personal budgeting.
Lajaunie and Dial both agreed financial education should be taught in Nicholls’ University Studies 101 courses, which introduce Nicholls students to the collegiate atmosphere and help them to adapt to it.
According to Carol Blanchard, associate dean of University College and director of the University’s Academic Advising Center, credit cards and their potential risks are addressed through articles on the University Studies’ new electronic supplement, Nicholls Connection (http://www.nicholls-students.com). However, the Web-based program is strictly for freshmen.
