Arm Your Freshman Against Credit Card Debt

Written by Ellen Katz

College students are beset by offers of credit cards. Teach them the basics so you don't get stuck paying the bills.tecahing college kids about credit card debt

Forget sex, drugs and alcohol. What you really need to discuss with your college student is the onslaught of credit card marketers.

It's difficult for parents to understand the prevalence of plastic in college today. After all, many of us had a hard time getting our first credit cards even after we graduated.

Make Your Freshman Credit-Smart
Educate your child about minimum balance payments, late fees, "teaser" interest rates, annual fees, and credit ratings.
For an emergency card, consider a "secured" line of credit. You deposit money into an account and that is the card's limit.
If you want your child to have a credit card, shop around for the best deal. Some companies offer vouchers for low airfares and other worthwhile perks.
Be aware that debt problems can destroy young lives. College students have committed suicide over large debt. Watch for signs of trouble.

Now, students don't even need a job to get a MasterCard or Visa; many creditors look at money from Mom and Dad as "income." Makes sense. Who else is going to bail out the kids drowning in debt after spending without restraint?

Many schools let marketers set up booths where they entice students with free T-shirts, water bottles and candy.

"When I was in college, I had a credit card offer at the bottom of every bag I took out of the campus store," explains Ellen Braitman, a Cornell University graduate and author of Dollars & Sense for College Students.

A study done by Georgetown University sociology professor Robert Manning shows that 70 percent of students at 4-year colleges have at least one credit card with an average balance of more than $2,000. An incredible 20 percent carry a balance of more than $10,000.

When students take on more debt than they can handle, the study found, two things happen: Affluent parents pay off the debt, while students from more modest-income families cut coursework to get jobs to pay off the cards. The worst cases drop out to work full time.

"We lose more students to credit card debt than to academic failure," said one Indiana University administrator.

So what do kids do with all the money? In his survey, some students told Manning they used credit cards to pay off speeding tickets and buy clothes, alcohol, cigarettes and hotel rooms for romantic trysts.

If that's not disturbing enough, Manning adds, "many parents would be shocked to learn that their son or daughter is the proud recipient of a body piercing or tattoo courtesy of the magic of plastic."

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