Many students first learn to manage finances in college, and with that comes a learning curve.
Money Matters on Campus, a three-year study conducted by EverFi and Higher One, found students are taking out larger student loans than in previous years but feel less prepared in financial management than in any other aspect of college life, according to EverFi’s website.
While certain student financial issues, including loans and banking, have gained traction on campuses nationwide, student credit card debt is not as problematic as it was five years ago.
LSU Student Financial Management Center coordinator Emily Hester said credit card debt was a much greater concern for college students in 2009, when the Center opened.
Hester said, when she was a student at the University in the mid-2000s, credit card companies were “constantly” on or near campus persuading students to sign up, she said. Hester recalled students would giving their Social Security numbers to local eateries that offered rewards such as free sandwiches if students signed up for a credit card without understanding the repercussions.
The 2009 Credit Accountability Responsibility and Disclosure (CARD) Act later restricted these companies’ proximity to college campuses, Hester said. It also required people under 21 to prove they have independent income before signing.
Though she still meets students with credit card issues, Hester said the problem has decreased since the CARD Act.
Many students lose the “in case of emergency” self-policy when it comes to credit cards, Hester said. They begin using it for payments such as car towing fees and eventually “emergency” concert ticket purchases.
Hester said debit cards are not usually a problem for students, who typically acquire them in high school.
While most students who come to the Center are in financial crisis, Hester said some visitors are fiscally secure and looking to make smart future decisions.
Though the number of students she sees daily ranges from zero to five, she said she expects increased traffic due to state budget crisis concerns.
From her experiences visiting other campuses, Hester said students at the University tend to have lower student loan debt due to TOPS. However, she said she has seen some students spend their loan money on irresponsible purchases, while others take out too many loans or struggle with lost scholarships.
Hester said the biggest challenge she has seen with students is independence from parents without independence from FAFSA. She said some students may have no help from their families, who still have high-enough income to disqualify the student for need-based aid.
Though she is not in financial crisis, communication disorders junior Brittany Klein said she recently visited the Center for tips to better budget her money. She said the visit was helpful, as was learning about a mobile app called Dollarbird, which helps track and regulate the user’s finances.
Klein said everyday goods such as food, which she pays for herself on a debit card, are her greatest concern. While she said credit card debt could be problematic, she remains conscious of her spending habits and is still dependent on her parents for expenses like rent.
“I know there’s a lot of people who don’t have that luxury,” she said.
Sports administration junior Jon Pitt, who has a debit and credit card, said his father wanted him to start building his credit three years ago, like his sisters did. Though his parents paid it when he was younger, he said he now pays for it himself.
Pitt said he uses his credit card for groceries and “big things,” mostly when he needs money and does not have immediate access to it. He said he does not have trouble with the credit card.
“It’s really just to get my credit up,” he said. “But I barely use it.”
Professor Carlos Slawson, who teaches Personal Money Management and Survey of Investing in the University’s Department of Finance, said credit cards are not as massive a problem as they used to be for undergraduates.
Slawson said the biggest financial issue he has seen in undergraduates is a lack of planning, he said even the tiniest amount of money helps.
“There’s a simple equation,” he said. “You have cash in and you have cash out.”
As financial management is not typically part of a student’s prior education, one of the greatest challenges facing college students is a misunderstanding of finances.
Slawson said a student’s financial wisdom depends on how his or her family shapes them before college. He said students who sit down for dinner with their families and engage in conversations about adult topics like financial management have an advantage.
In the long run, it is beneficial for students to start making smart decisions when they are younger and more flexible.
Hester said she hears a lot of students claim they are frugal but do not have any budget or plan, and graduates drastically rush into adulthood post-graduation, which she thinks is “just a really, really bad idea.”
Hester worries about the housing undergraduates choose to live in, especially with amenities like a lazy river and stainless steel appliances at $600 to $800 per month, because it creates unrealistic expectations for post-graduation living.
“When [you are] a young, early-20s working person, maybe it’s okay to live with two … or three roommates,” she said.