Student credit card debt doubles

In a report published Monday by the college financial aid company Sallie Mae, more students are using credit cards for purchases and are accruing debts as a result.

This year proved to have the highest rate of credit card usage among undergraduate students since the survey started in 1998.

The study, “How Undergraduate Students Use Credit Cards,” combined data from separate research projects that Nellie Mae, a subsidiary of Sallie Mae, found to conclude the final results.

“There were two sets of data wrapped into this study,” said Sallie Mae spokesperson Patricia Nash Christel. “It was a random sampling of students and other data [from] analyzing credit reports.”

Starting in 2004, a student survey section was included to help clarify the information that was being received from the credit bureaus. By adding a survey, it gave some background as to what types of things were being purchased with credit cards, according to the report.
Christel said this particular study was focused purely on undergraduates. Credit card companies were also not singled out for information, either.

The report shows a spike in credit card usage in 2008 over 2004, when the last survey was conducted.

The report found that in March 2008, the average debt of an undergraduate student, compared to that in 2004, had risen more than 45 percent to $3,173.

Also recorded was the 2008 average credit card debt for undergraduate students. Freshmen had $2,038 in debt, sophomores had $2,362, juniors had $2,912 and seniors had $4,138.

“It’s not surprising, but it’s unsettling more college students are using credit cards than ever before,” Christel said.

Textbooks and general school supplies were the top things purchased using a credit card, according to the report. The percentage of students that use a credit card for commuting costs and computers has nearly doubled since 2004.

At the University of Cincinnati, the method of textbook purchase has seen a change in the last 10 years, said Linda Gindele, director of the University of Cincinnati Bookstore in the Tangeman University Center.

“A lot of students are using debit cards,” Gindele said. “And debit cards weren’t really around 10 years ago.”

Despite the funds coming out of a checking account, purchases using a debit card come up as credit card purchases at the bookstore, which may account for the enormous increase in reported credit card usage, from the credit bureaus.

“I would expect the number [of credit card users] has increased,” Gindele said. “But debit cards aren’t exactly credit cards.”

The random sampling of the undergraduates surveyed responded that the top reason why they use credit cards is due to not having enough money saved up or not receiving adequate financial aid, according to the study.

This trend has led to an increase in workload at Sallie Mae.

“We are certainly seeing an increase in applications – or loan volume in general,” Christel said. “It’s about planning. Plan with the family so you’re not caught off guard at the last moment.”