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LaToya Irby

Despite the Credit Crunch, Student Credit Card Debt is Overwhelming

By April 27, 2009

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The average college student is carrying more than $3,000 in credit card debt on at least four credit card. This shocking statistic comes from a report released by Sallie Mae, one of the nation's largest student loan providers. The report also shows that:

  • 84% of college students have a credit card
  • The average number of credit cards is 4.6
  • Half of students have 4 or more credit cards
  • 21% have a balance between $3,000 and $7,000!
  • 19% of college seniors have balances above $7,000
  • Only 11% of students have a $0 balance
  • 80% have been surprised at their balances
  • 68% have made a purchase knowing they didn't have the money to pay the bill
  • 92% say they've used their card to pay for a college expense not covered by financial aid, mostly textbooks and school supplies

Education expenses aren't the only thing students are using their credit cards to pay for. They're also using their cards to pay for food, clothes, and cosmetics.

Although 67% of freshman students carried a credit card (compared to 90% of juniors and 88% of seniors), in 2004, only 42% of freshmen students had a credit card. That's a 60% increase. Most college students with credit cards got their credit card either before entering college (39%) or during their freshman year (36%).

Credit card companies have come under fire for their presence on college campuses, but when asked how they chose their first credit card, only 5% of students said from a vendor on campus. Thirty-eight percent (38%) chose their credit card from a mail solicitation. Another 19% got a referral from a parent.

While senior students currently carry the highest average credit card debt at $4,138, freshmen students aren't far behind at an average $2,038. At that rate, current freshmen are could see credit card balances at $8,000 or more by the time they graduate college.

There are many alarming statistics in the report, but perhaps the most alarming is that 35% of students say they don't talk to their parents about credit cards. These students were more often surprised at their card credit card balances after receiving their statements. Even if it's not from a parent, credit education is important before using a credit card.

If you're a college student just starting out with credit, here are 8 tips to help you manage your credit cards.

Download the complete report (1MB PDF)

Comments
April 27, 2009 at 12:06 pm
(1) Lee says:

Hi,
I work with a Congressman and I am doing research on an Amendment. This Amendment would prohibit credit card reps. from offering gifts or incentives to students who sign up for a card from doing so on college campuses. I see you have excellent stats. Can you give me the sources you used to write this piece?
If so please write me at glass.lee@gmail.com
Thank you!

April 28, 2009 at 12:41 am
(2) Chip says:

More (sad) statistics to add>

Average interest rate of said credit card product to this group, average finance charge of credit card product, average credit score (if there is one)..

Students should not have revolving credit cards. Period. Fellow parents > teach your children fiscal responsibility early, so that they learn the benefits of financial integrity. We don’t want them to come out of college with collection agencies at their backs!

September 11, 2009 at 10:17 am
(3) ANewHorizon says:

I’ve got a great college angle that’s a perfect fit for your readers. What happens to college students when they graduate college with credit card debt? The average undergraduate has over $2,200 in credit card debt and this number jumps dramatically to $6k for future graduate students. A New Horizon Credit Counseling has the first Financial Wellness Plan to assist students with restructuring their credit card debt and helps put them on a budget.

Sallie Mae’s research suggests more students are paying for educational expenses such as books and school supplies with credit cards. And they’re doing so more often. Many of these students donít know where to turn to for financial help and maybe reaching out to them with financial literacy and budgeting ideas, they will start using credit cards wisely.

We would love to work with you on a small write up on the benefits of using a credit counseling service.

March 28, 2010 at 4:18 pm
(4) StudentCreditCardDebtHelp says:

A Common belief is that most of the students come from wealthy folks who purchase anything they want.

But that is just not the case. According to a research done recently, most students use their credit cards as a means to continue their education. And every year, the average debt of a college student increases and by the time a student graduates, the total amount could be within the range of $20,000-$22,000.

March 28, 2010 at 4:19 pm
(5) Dan says:

Common belief is that most of the students come from wealthy folks who purchase anything they want. But that is just not the case. According to a research done recently, most students use their credit cards as a means to continue their education. And every year, the average debt of a college student increases and by the time a student graduates, the total amount could be within the range of $20,000-$22,000.

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