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College Student Credit Card Debt
The relationship between credit card debt and college students is a major issue that is affecting many students in the US. The debt that students are accumulating every year is astronomical. A major credit card debt is rising is the marketing tactics used by credit card companies, and their relationships with colleges. The lack of credit card education in students is also a major contributor to rising debt, as well as credit cards not being honest and transparent with their rates and policies This sort of overwhelming debt for college students also affects the students’ academic performance, and could have an impact on their social life, leading to serious issues that trace back do debt.
Marketing techniques and tactics that credit card companies use to lure college students is the main reason that students fall into debt. Companies such as Visa and MasterCard, according to Eric Hoover, have gone to the extent of paying large universities upwards of one million dollars to advertise their credit cards on campus. Due to the companies being granted permission by the university to be on campus, it gives credibility to these companies. By these card companies using the name of the university to their advantage, students feel that it is safe to obtain or apply for these cards because they were allowed on campus. These credit card companies lure college students, specifically incoming freshman, by gifting them things such as tee shirts and cups for signing a few pieces of paper. What the students do not realize is that they signed a contract agreement with that credit card company to use their card, which the student might otherwise have not participated in if they would have been told what they were signing up for. The students that do not understand that they are signing up for a credit card, are not given adequate details about interest rates, which are usually high due to the student’s lack of credit history or them not having any established credit. These credit cards are also often advertised as rewards cards, and unfortunately college students do not realize that it is an actual credit card.
Credit card companies are aware that most college students are not given proper credit card education or will be irresponsible with their cards. A credit card is overused by a college student in various ways, whether it be for shopping, food, or possibly entertainment. In “Relationships between College Students’ Credit Card Debt, Undesirable, Academic Behaviors and Cognitions, and Academic Performance.” Eileen Hogan explains furthermore a big concern for student credit card debt. The tuition for universities and colleges around the United States are constantly rising, putting many students in a bind, where they must turn to various methods of aid to pay for their books and tuition. An accessible and easy way for these college students in need of money to pay for their tuition is credit cards. Students begin to use as many credit cards as they can get to help them pay for their tuition because of different reasons; the student is taking a large number of hours that financial aid cannot cover, or students simply have too many bills to pay on their own.
The lack of education that students have in financial responsibility is a big favor in the rise of credit card debt that could be addressed easily by universities but are not doing so, and some parents do not either. Parents should teach their children from a young age the importance of saving money and purchasing things only within their budget. Simple ways that parents could do this is by starting a piggy bank with their kids, or as they get older open a savings account with a bank in which they can save their own money. Another way parent’s influence their children’s financial education is by informing them about credit cards. It can be as simple as warning them about high interest rates that specific cards have, and when it is appropriate use the card. A way that universities educate the students is by having seminars in which all students can attend and learn about credit cards. The seminars can also vary in what is taught, for example, a seminar can inform students about credit cards before obtaining one, in which they could learn about interest rates, usage, benefits, dangers, and how to properly choose a card that caters to their needs. Another type of seminar is one informing student that have already obtained a credit card, or have fallen into debt, on how to properly use the card they currently have, and how to free themselves from the debt that they accumulated. Colleges could also provide personnel on campus that students can reach out to about credit cards and have accessible links on the school site that students can use to learn about credit cards, as most credit card are used for advertising.
Besides the fact that students become overwhelmed when they accumulate a large sum of credit card debt, this directly affects students in their school performance. In a study done by Eileen Hogan, it is proven that the stress of not being able to pay off their debt leads to poor performance in school. She states that once the students become overwhelmingly stressed, they begin to skip class, resulting in lower grades. A way that students find stress relieve is ironically to spend more money on things like clothes, shopping, in which they typically use a credit card. Other behaviors caused by the stress of debt is students resorting to alcohol, and even drugs, to feel a relieve. Students who do not have as much debt typically spend more time focused on school, studying, and going to class, leading to better performance and better grade results. A big reason for the students not being in as much debt is because even if they do have a credit card or have accumulated some sort of debt, is the fact they become so exhausted with school, and possibly work, that they have no desire to go out and spend money or shop online and use their cards. For the students who did fall into debt, they are forced to work more hours, leading to less study time, which has a direct correlation with poor grades. The overwhelming stress could reach to the extent of students completely dropping out of school to work more hours and pay off their debt. Although credit cards could be beneficial in a state of a financial emergency, it is easy to fall into debt with a credit card. If college students were properly educated about credit card usage and risks; the debt could possibly see a downfall. Regulations put on credit card companies that target college students, specifically on campus, such as fully explaining the interest rates and full details of the card policies, could also contribute to a reduction in debt for students. The overwhelming stress and problems caused by credit cards that students suffer from will only continue to rise, until the issue is truly addressed, which are credit card companies and their tactics towards vulnerable college students.
- Grable, John E., and So-Hyun Joo. “Student Racial Differences in Credit Card Debt and Financial Behaviors and Stress.” College Student Journal, vol. 40, no. 2, June 2006, pp. 400–408. EBSCOhost
- Hogan, Eileen A., et al. “Relationships between College Students’ Credit Card Debt, Undesirable Academic Behaviors and Cognitions, and Academic Performance.” College Student Journal, vol. 47, no. 1, Mar. 2013, pp. 102–112.
- Hoover, Eric. “The Lure of Easy Credit Leaves More Students Struggling With Debt.” Chronicle of Higher Education, vol. 47, no. 40, 15 June 2001, p. A35. EBSCOhost.
- Norvilitis, Jill M., and Phillip Santa Maria. “Credit Card Debt on College Campuses: Causes, Consequences, and Solutions.” College Student Journal, vol. 36, no. 3, Sept. 2002, p. 356. EBSCOhost
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