According to student loan company Sallie Mae’s 2009 national study of usage and trends, undergraduate students are relying more on credit cards and accumulating the most credit card debt since 1998.
The percentage of undergraduates who own at least one credit card rose from 76 percent in 2004 to 84 percent, and the average credit card balance grew by 46 percent — from $2,169 in 2004 to $3,173 — making it the highest average balance to date.
Student loans also play a vital role in this debt epidemic. Loans are becoming less available to undergraduates, causing nine out of 10 — or 92 percent — of students to pay for education expenses directly with their credit card.
Education expenses are included in the 134 percent increase in amount of money already being charged to credit cards, while the University’s 7,114 undergraduates lucky enough to obtain a loan – from a pool of 10,348 applicants – start an entirely different debt-accumulating process.
Compounding these already high numbers is next year’s tuition increase.
However, since the study showed debt is strongly correlated with grade level, a freshman may have to worry about less debt than a senior. The average debt ranges from $939 per person for freshmen — a 27 percent increase from 2004 — to $4,100 per person for seniors — a 44 percent increase.
Debt, while rampant among most undergraduates, can still be managed if proper steps are taken. Crystal Oubre, assistant director of the University’s Office of Undergraduate Admissions and Student Aid, recommends a strict budget before applying for a credit card or loan. Also, she advises not to take out more than you need.
Other financial experts say the key to managing credit card is looking for a low APR, which will lower interest on the money you can’t pay monthly, and minimizing your credit card use to once every six months.
The safest way to manage debt, however, is still not to acquire it in the first place by not using credit cards and paying off your loans as soon as possible.
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Contact Natalie Roy at [email protected]