How undergraduate students use credit cards: Sallie Mae's national study of usage rates and trends, 2009
Study find rising number of college students using credit cards for tuition. On average, students charge $2,200 in direct education expenses.
Despite the credit freeze, college students last year used credit cards more than ever before, including charging tuition and other direct education expenses, according to a new study from Sallie Mae, the nation's leading saving- and paying-for-college company. The report, "How Undergraduate Students Use Credit Cards: Sallie Mae's National Study of Usage Rates and Trends, 2009" (PDF, 1MB), is the fifth in a series conducted since 1998 through the company’s affiliate Nellie Mae that analyzes the credit card use of student loan applicants.
According to the report:
- Nearly one-third (30 percent) put tuition on their credit card, an increase from 24 percent in 2004, when the study was last conducted.
- In total, 92 percent of undergraduate credit cardholders charged textbooks, school supplies, or other direct education expenses, up from 85 percent in the previous study. Students who used credit cards to pay for direct education expenses estimated charging $2,200, more than double 2004’s average of $942.
- Eighty-four percent of undergraduates had at least one credit card, up from 76 percent in 2004. On average, students have 4.6 credit cards, and half of college students had four or more cards. The average (mean) balance grew to $3,173, higher than any of the previous studies. Median debt grew from 2004’s $946 to $1,645.
- Only 17 percent said they regularly paid off all cards each month, and another 1 percent had parents, a spouse, or other family members paying the bill. The remaining 82 percent carried balances and thus incurred finance charges each month.
- Eighty-four percent of undergraduates indicated they needed more education on financial management topics. In fact, 64 percent would have liked to receive information in high school and 40 percent as college freshmen.
| When used responsibly, credit cards can be an asset by saving the user time and enabling access to goods that might not otherwise be available. College students need access to financial options that combine financial education and parental involvement. Developing, then following, a financial plan of which credit cards are only one component will benefit students more in the long run than the simple extension of credit. |
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Parents, educators, and financial institutions can together take action to respond to college students’ need for responsible credit options. College can be a time not only for academic study and exploring future careers but also for learning smart money skills that prepare the way for a lifetime of effective household financial management.
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