Casey Hutchens often opted for plastic. Hutchens was in school full time and working two jobs when the bills piled up. The creditors called him every day when he realized how deep he was in credit card debt. “It was the most stressful my life’s ever been,” Hutchens said. “It sucks you in because when you’re young you think that’s your only source of expendable income.” Hutchens, history and political science senior, is part of a growing number of college students who find themselves buried in credit card debt. Frances Lawrence, human ecology professor and editor of Financial Counseling and Planning, said a recent Nellie Mae credit card study indicated that the average credit card debt of undergraduate students is $2,169. “Excessive credit card debt and late payments can damage students’ credit ratings,” Lawrence said. Lawrence said having poor credit history early causes students a range of problems. “A poor credit history affects a student’s future by possibly losing a great job offer, having trouble renting an apartment or getting a phone or requiring to pay a higher deposit on utilities, being denied for a loan for a car or home or required to pay a higher interest rate,” said Nick Jacobs, spokesman for the National Foundation for Credit Counseling. “There are a lot of dangers out there in being out on your own for the first time and wanting that iPod, for example,” Jacobs said. “All of a sudden you charge all this stuff on your credit card, and you have to figure out how to pay for it.” Getting into debt Lawrence, who has been involved in research related to college students and credit cards for more than 10 years, said, “Without a financial plan and knowledge of how credit works, and the consequences of over-indebtedness, students – like other segments of the population – can easily get into credit card debt.” Growing up in an upper middle-class family in Lafayette, Hutchens said he was used to a lifestyle of spending freely. “You get used to a certain lifestyle,” Hutchens said. “When you’re 18, you want all that.” Lawrence said the convenience of credit may tempt students to live beyond their means. Hutchens said that when he came to the University, he would pay using his credit card when he was running low on cash. “Once I got out on my own, I didn’t realize how many things were out there that I’d have to pay for,” Hutchens said. “When I’d run short of money, I’d just put everything on my credit card.” Hutchens said he got his first credit card when he was 15, and by the time he was 18, he had a limit of $10,000. He said that before he knew it he owed almost $7,800 to the credit card companies. “It affects everything you do,” Hutchens said. “It was a big adjustment for me to finally realize I’m getting myself in a position I’m not going to be able to get out of.” Hutchens said he worked a full-time job and a part-time job while being a full-time student to pay off his debt. Hutchens said his GPA fell because he was working so much. “I went from a 3.85 to a 3.2,” Hutchens said. “And by my standards that was a lot different than I was used to.” Hutchens is one of many University students who has experienced credit card debt. Lawrence said that in a recent study of 1,400 University students, the students who were financially at risk reported holding multiple credit cards and did not discuss the importance of maintaining a zero balance. “A recurring statement was, ‘It is too easy to get credit cards,'” Lawrence said. Lawrence said the at-risk group “demonstrated relaxed attitudes toward debt.” She said other common responses given were “I’m going to pay it off when I leave here” or “I’ll deal with my mistakes later.” Card Strategies “It’s pretty shady, the stuff these companies will do, especially when they know you are so young,” Hutchens said. Hutchens said the card companies will raise the limit once their customers get close to it. “It’s sad the way these companies work,” Hutchens said. “Say I was 18 years old, and I get a card that has a $1,000 limit on it, but once you spend $700, $800 on it, they’ll hike up your limit to $2,000, $3,000, and they just keep adding more.” Lawrence said some credit card companies target college students with “freebies” and promotions such as a free T-shirt at a sporting event when students apply for a credit card. “There is no doubt that credit cards are available to students,” Lawrence said. “Students are likely to be asked when they purchase items if they want to save 10 percent on today’s purchases if they apply for a credit card.” Lawrence also said credit card offers are frequently received by students in the mail. “One student I know has received eight different credit card offers by mail in the last six weeks,” Lawrence said.
Relief
“I got out before I graduated, and it takes some people 10 to 15 years to get out of it,” Hutchens said. “If you’re smart you can get out of it. You have to just find people who can help you.” Hutchens said he transferred his entire balance to one card, and he would pay that one card every month. “You have to be really conscious. You get 50 million credit card offers a week,” Hutchens said. “If you look through them, you can find one that’s 0 percent APR – no interest.” Kristy Gaspit, product analyst with Campus Federal Credit Union, said most students can get out of debt in two to three years. “We work with the individual students to help them,” Gaspit said. “Every case is different, but you can completely wipe out your debt in 24 to 36 months.”
—–Contact Elizabeth Miller at emiller@lsureveille.com