The perils of student credit card debt is becoming a major concern for our next generation of graduates.
The student community is supposed to be the movers and shakers, the facilitators of social change and the group most responsible for propelling society in a new direction.
"Some debts are fun when you are acquiring them,
but none are fun when you set about retiring them."
- Ogden Nash, American Writer |
Unfortunately for America, the direction for many students now seems to be straight into debt. Undergraduates today carry on an average three to four credit cards and graduate students carry as many as six.
When they have a car break down, it goes on a credit card, trips back home for the holidays go on the credit card and school expenses that student loans do not cover are also paid for with a credit card.
Many students who come from lower-income homes are also from families that have mortgaged the home for tuition and housing. These students don't want to burden their parents with demands for money for daily living costs and put all those expenses on their credit cards.
College students routinely run up their credit card bills during the semester and then take extra student loans to pay off the cards. As a result, they graduate with up to $8,000 in student credit card debt, not to mention the costs and extra expenses of the last semester.
According to recent surveys, the segment of adult Americans between the ages of 18 and 24 witnessed a rise of almost 104 percent in average credit card debt in the last 4 years alone.
Sadly, the student segment is the one pursued most aggressively. Countless mailers, emails, on-campus kiosks and publicity teams are popping up on every corner of the campus.
Students are told that it is easy to sign up and are not given any real understanding of how to use a credit card responsibly. They sign up unaware of the various charges they will have to pay according to the fine print.
These fine young men and women have not experienced life yet to any real degree so their financial illiteracy makes these slick credit offers seem like a free ride. Kids trying to 'fit in' with their more affluent friends, end up neck deep in student credit card debt.
To make matters worse, student credit card debt is on the rise due to many credit card companies switching to a risk-based assessment model that specifically targets young people because of their lack of financial knowledge.
As little as 25 years ago, no bank would imagine being part of a group of creditors who have provided a college freshman a total of $50,000 in credit card limits.
Young adults who have never held a job are told in so many words, that staying out of debt is an old fashioned value. This makes them believe that rebelling against their parents, means enjoying a higher-end lifestyle.
However, they don't realize that the margin of financial error that they get in return for the 'gotta-have-it-now' mentality, is unbelievably small. It has become essential for Americans, especially the student community, to realize that the promise of unlimited resources is not realistic, and is not something to bet your financial future on.
The government will no longer be there to absorb all the foibles of this generation. Students need to proceed with extreme caution when considering how to conduct themselves financially.
Students need to consider their financial goals and start planning now, very carefully.
"Money and success don't change people;
they merely amplify what is already there."
- Will Smith, Actor |
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Debt is NOT your friend. It's not a wonderful "tool" for building wealth. That's a myth.
