Credit Card Problems With College Students

College students have incurred record rates of credit card debt since the 1990s, and every year the amount of debt that college students have on lines of credit rises. Credit card debt wreaks havoc among college students, who are often also in debt from student loans and have low-paying part-time jobs. While the credit information website Card Ratings states that increasing numbers of competent debt counselors specialize in student debt, larger numbers of indebted students and graduates feel hopeless.

Rising Rates

All sources point to rising debt among college students. Card Ratings reports that student credit cards came with limits of several hundred dollars only after a parent cosigned until the 1990s. Student debt has gone up steadily with credit limits ever since, and college finance giant Sallie Mae reports that student credit card debt in 2008 was up to 44 percent from 2004 to average $4,138. Furthermore, nine out of 10 students report using a credit card to pay for school expenses but only 17 percent report paying off their credit card bills every month.

Campus Campaigns

Articles in Card Ratings, USA Today and MSNBC all point to aggressive campaigns by credit card companies to sign up students as one factor behind ballooning student debt. Companies often pay colleges to let representatives onto their campuses and then try to attract students to high-interest cards with minor giveaways and an emphasis on free money. Card Ratings also notes that these campaigns work because most college students do not receive formal instruction on managing their money or even informal education from their parents about how to use a credit card responsibly.

Tuition and Fees

College tuition and fees increase much faster than inflation, wages and even financial aid, according to MSNBC. Students increasingly cope by putting expenses such as books on their credit cards, and the amount that goes on the card has spiked. A 2004 study by Sallie Mae reported that students put $942 in school-related costs on their credit cards annually. When the study was repeated in 2008, the number had more than doubled to $2,200.

Last Resort

USA Today reports that many students use credit cards as a last-resort source of funding to pay for school. Following the 2008 financial crisis, private loans became increasingly more difficult to obtain, college tuition continued to rise, and some students made up funding gaps by using credit cards. MSNBC reports that the one advantage of this strategy is that credit card debt can be forgiven through bankruptcy proceedings while student loans cannot.