Personal Finance

Credit Cards and College - A Dangerous Mix

| by Focus on the Family

By Heather Koerner | Focus on the Family Blog

Student loans are just one of my buttons.

If you've read Boundless at all, you know that. I've heard many pro-debt
arguments, but can't agree with any of them:

1. Student loans are "good" debt because they're an investment (Me: No, it's
still unsecured debt)

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2. You simply cannot go to college without them (Me: No, there are dozens of
things you can do to eliminate the need for student loan debt — most of us just
don't want to do those things)

3. Student loan debt is worth it to earn a professional degree (Me: According
to one Nellie Mae study, professional students experience "the greatest levels
of burden" and "debt levels are high enough to make even their relatively high
starting salaries appear inadequate.")

Bottom line: Ask just about anybody who has taken out student loans two
questions:

1. Should you have taken out less debt?
2. Are your life choices limited now because of the debt you have to pay
back?

I'll bet you my Boundless t-shirt (not
really), that the answers are Yes! and Yes!

Still ... as much bad as I've seen student loans do, the damage does not even
compare to the damage done by credit cards. And you combine credit cards with
education debt and you've got one serious mess.

That's why a new study by Sallie Mae does not
bode well. The study looked at the credit card behavior of college students.
Here's some highlights of the study:

  • The average credit card balance for a college student last year was $3,173
    (higher than ever before).

  • Only 17 percent of college students pay off their balance monthly; 82
    percent carry balances and incur finance charges each month.

  • 40 percent of college students have charged items knowing they did not have
    the money to pay for them. (Ummm...)

The point of the Sallie Mae study was (as they put it) to "underscore the
importance of educating college?
students about using credit effectively, weighing their spending decisions and
considering their source of borrowing."

I think they're right to sound an alarm. There is just no way to justify
putting college expenses on credit cards. The benefit will never overcome the
cost. (Just click onto bankrate.com to see how many
months it takes to pay off a single charge of $3,000 while only paying the
minimum payment. Hint: That child you haven't even had yet might be graduating
high school.)

But I can't agree with Sallie Mae that our emphasis should be on teaching
people to "use credit effectively." I've seen and heard about enough broken
homes, working-to-pay-off-the-student-loans mommies and
got-no-choices-for-the-next-ten-years lives to say wholeheartedly — It isn't
worth it. Just don't use unsecured credit.

If you can only afford college with credit cards, then you can't afford
college right now. That doesn't mean forever. But it does mean for right now.
And if you're already running on the hamster wheel of repayment (for loans or
credit cards), take heart. Fight that debt for all you're worth and get
that millstone off your neck.

Trust me. That diploma feels a whole lot better without Sallie Mae or VISA
cracking the whip on your back.