by leslie Richardson (staff writerlrichardson@republicanherald.com)
With students falling deeper in debt, are high schools and colleges doing enough to educate undergraduates about credit card use?
A May 2011 Consumer Reports survey shows 2011 college graduates had a rate of debt that is 47 percent higher than their counterparts a decade ago and up 8 percent from 2010. The average graduate has a $22,900 debt.
According to a 2009 report issued by the Student Loan Marketing Corporation, Reston, Va., a company that originates, services and collects student loans - commonly called Sallie Mae - college students are also using credit cards more than ever, including charging tuition and other education-related expenses.
According to the report, researched by Sallie Mae's sister company, Nellie Mae, and the fifth issued since 1998, 84 percent of college students had at least one credit card, up from 76 percent in 2004.
"After reading the statistics and seeing things like more people are dropping out of college because of credit card debt than student loan debt, I just thought we needed to do something," Mahanoy Area business education teacher Kathy Loy said.
Loy pushed the school's administration to offer a personal finance class and require that each junior at Mahanoy Area take the class.
Loy said Mahanoy Area jumped at the chance early on, about five or six years ago, to offer the class that is now a national initiative to push financial literacy training in high school.
Since juniors, and a few seniors who for some reason missed the class the previous year, spend the whole school year in the class, Loy is able to devote six to eight weeks on the subject of credit.
"We talk about good versus bad credit. We look online to discuss which is the best credit card. We discuss the fees involved and analyze statements," Loy said. "I talk to parents during open house and many of them say they wished they had something like this when they were in high school."
Gwen Witmer-Belding, Blue Mountain director of curriculum, said all high school students are required to take an accounting course where all types of financial management are discussed.
"Subjects like credit card debt, borrowing for a car, mortgages and how interest is compounded are all discussed," Witmer-Belding said. "I'd like to think our accounting class is unique to Blue Mountain, especially in that it is required of all students."
Witmer-Belding also said the Your Employable Skills class, offered at Blue Mountain and other county school districts, also teaches students many financial topics like students loan debt, credit card benefits and drawbacks and the drawbacks of making minimum payments.
The Sallie Mae study shows students own 4.6 credit cards, on average, and half of all college students had four or more cards.
The average credit card balance is $3,173, higher than any previous study.
The study also suggests that the higher the grade level, the more heavily students used their credit cards, with seniors graduating with an average credit card debt of more than $4,100, up from $2,900 in 2004.
The study found that freshmen carried an average credit card debt of $939, nearly triple the $373 in 2004. Only 15 percent of freshmen had a zero credit card balance, down from 69 percent in 2004.
Jason Dietz, of Alvernia University, Reading, with a campus in Schuylkill County, said it is important to know what the statistics are, but talking to students and finding out what is going on an individual basis is more helpful.
"We hear so often that the student has no other choice but to use a credit card to pay for books and supplies," Dietz said. "Grants may not cover expenses, loans may not be enough. Parents may have lost their jobs. Sometimes students come to us and tell us they just don't have money to buy books. We try to work with the students to help them make the best decisions.
Alvernia is taking educating their students about credit card debt one step further this year.
"We require all freshmen to take a first-year seminar class which covers a variety of topics including debt that can accumulate during college. This year we are requiring first-year students to also take a one-hour workshop on financial literacy," Dietz said. "We will cover topics like what type of financial aid is best for them as well as using credit cards wisely and using credit scores to aid them and how credit scores can impact them.
The presence of credit card companies on college campuses has been regulated by the Credit Card Accountability, Responsibility and Disclosure Act of 2009, but according to the Sallie Mae study, when asked how they chose their first credit card, only 5 percent said they applied from a vendor on campus; 38 percent said they chose their credit card from a mail offer; 19 percent got a referral from a parent.
CARD states anyone under the age of 21 cannot apply for credit cards unless they have a source of income or a co-signer.
CARD also offers protection for students by including a requirement that credit card companies and universities disclose agreements about the marketing or distribution of credit cards to students.
The CARD Act prohibits giveaways at application sites on or near campuses. The legislation limits the amount of "pre-approved" offers available and urges colleges and universities to restrict credit card marketing on their campuses, including requiring advance notice of when lenders will be on campus and limiting the locations of marketing activities. The law also encourages colleges to require credit and debt management sessions as a routine part of student orientation programs.
In the 2009 Sallie Mae study, 84 percent of undergraduates admitted the need for "more financial management education."
According to Jerry Bowman, Penn State Schuylkill manager of human resources, the campus does not do credit card counseling, although Melinda Anthony-Spolski, Coordinator of Counseling and Disability Services at Penn State Schuylkill, speaks to parents briefly at the campus's First-Year Testing, Consulting and Advising Program about credit card debt in college.
Bowman said after making inquiries about credit card counseling, he was referred to the website www.cashcourse.org/psu by Phillip Burlingame, Associate VP for Student Affairs System. Bowman said Penn State students, college-wide are referred to the site to educate them on the pitfalls of credit card debt.
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