Monday, April 14, 2008

Credit Cards and College Debt...Do They Go Hand-In-Hand?

Did you or are you currently Majoring in Plastic as a college student?

According to a recent Washington Post article (click on the link above to read the whole story):

"In a recently released U.S. PIRG survey of 1,500 students at 40 colleges in 14 states, nearly two in three students reported that they had at least one credit card. Fifty-five percent of cardholding students said they used their card for day-to-day expenses. Reflecting escalating college costs, 55 percent said they charge their books and nearly one-quarter said they pay their tuition with a card. On average, those freshmen whose parents were not helping them with their bills had a balance of $1,301. Seniors had more than twice that, $2,623."

Sometimes, taking on debt as a student simply cannot be helped, but PLEASE keep in mind that credit cards should be used with caution and that it can take years to climb out of credit card debt. Credit cards may indeed prove to be the best way for some students to finance expenses associated with colleges but make sure to explore all options before resorting to credit cards:

1. Student Loans (AFTER YOU HAVE EXHAUSTED YOUR SCHOLARSHIP SEARCH). Student Loans should be taken out only if you have looked high and low for scholarships and aid. The student loan industry has been under fire lately, but low interest federal loans if you are eligible are still the best way to finance college if you or your parents don't have the cash up front. Federal loans normally have lower interest rates than private loans and can normally be consolidated in the future to lock in on a lower rate.

2. It Takes A Village To Put A Child Through College. Your "village" (Family members friends and supporters) may be more receptive than you think to help you with the expenses associated with college. Reach out to them and explain why you would like their help. Many loved ones would like to feel that they have invested in your future. Instead of asking for the iPod or Play Station 3 video game, ask your favorite Aunt or Uncle to purchase a text book, or make whatever small contribution they can afford to give you to go toward tuition. And be sure to send out thank you notes to your "village" to express appreciation.

3. Work and Pay For School As You Go. If you are are working full time, try taking only as much course work as you can afford to pay for out-of-pocket. This method may take you longer to complete your degree, but you won't have to worry about credit cards or loan payments to pay off in the future.

**If at all possible, credit cards should only be used when you know you can pay off the balance in full when the bill is due. In a perfect world everyone would be able to do this, but its never too late to start the practice if you haven't done this in the past.