Reston, VA - There are now more concerns for student finances than ever before. Sallie Mae Servicing is reporting that more students are using credit to make their regular tuition payments for school. Last year, around 30% of those in college were using credit for tuition, a large jump from years prior.
The average amount being charged for expenses directly related to higher education is around $2,200 being charged on plastic. Not only is the increase in usage become a huge concern, it is also worrying to realize that the average student has 4.6 credit cards and over half of students attending college have 4 or more active credit card accounts.
What is of most concern is the collateral damage to students who are getting in over their head in debt during their college years, with an inability to pay off such debts during or shortly after college, thus leaving credit damage a big reality for most students. Right now, the average credit card balance carried by a college student in the United States is around $3,200, which ranks higher than during any other year.
The result of the decision to charge tuition and college expenses on credit is that students could end up paying double for their college degree than if they used other methods, such as financial aid, to pay for their schooling due to the additional finance charges and penalties for late or missed payments.
Credit card use during a college career can make or break a new graduate’s financial future and alternative methods for paying for college are recommended. While it may be increasingly difficult to afford a higher education, students should be encouraged to avoid carrying credit card balances from month to month and invest time into finding alterative methods to finance their degree, their school supplies, and the required educational textbooks.
Other issues the study uncovered is that 60% of college students were surprised at how high their credit card balances actually were, with another 40% saying they charged their card for items they knew they did not have the cash to pay off the bill. Only 17% of student surveyed said they regularly pay off their balances in full. 1% admitted to having others such as a spouse, parent, or other family member footing the credit card bill, leaving 82% carrying month-to-month balances that accrued interest charges.
The report was conducted by Sallie Mae to bring to light the importance of keeping college students informed on the importance of keeping credit card balances low and the educational aspect of using credit wisely. For more information on the full results of the full study, visit Sallie Mae’s website.