Parents are once again coming around to that time of the year when they send their children of to college to hopefully earn their degrees and move on to a good life. Unfortunately, a lot of bad things can happen when their kids are in college and, if statistics from Sallie Mae are to be believed, one of the worst is credit card debt.
Credit cards and students are definitely a bad mix. The problem is quite widespread and well known. Unfortunately, the problem had enough time to grow and get big enough so that some students graduating from college this year will be several years away from paying off all their credit card debts. That is a very serious financial situation to be in, considering that these students are just starting off professionally.
A recent study from Sallie Mae show that the graduating students of last year carried an average of $4,100 in debt. That's up by $1,200 from 2004's average of $2,900. It gets worse. According to the statistics, one in five college seniors have a credit card balance higher than $7,000. Also, 62% of them have more than four credit cards at a time. The situation is an alarming one, considering that a majority of college students don't have any reliable employment and that their credit card payments largely depend on the money that their parents are giving them. What is even more troubling is that many college students are not very well equipped to handle the responsibilities of carrying credit card debt.
The new credit card bill that President signed last May will mean more protection for credit card holders and, in fact one of the primary targets for protection in the bill are students.
There have been many complaints against credit card companies offering easy-to-get credit cards to students. Because students are seen as big spenders, credit card companies see them as golden earning opportunities. Unfortunately, in the end it is the parents who will have to shoulder the burden of paying off those spendings. Another option is to go into debt. Alarmingly, most college student are not very worried about debt and consider it as a normal part of their lives. This kind of thinking is very dangerous, especially when the people who are carrying them are the future generations of the country.
For most consumer advocates -and parents, the credit card bill is a big step forward. Although credit card companies are going to be complaining about it – and some students as well, the legislation in the bill will help young Americans avoid the dangers of getting into large debts and losing several years of monthly income to paying it off.