More college students are using credit cards to pay for everything from tuition to food, leaving many increasingly anxious about their growing debt.  A new study just released by Sallie Mae, the nation’s leading provider of college loans, shows the number of cards, the amount of debt and extent of concern are increasing.  At the same time, the numbers of students paying their balances in full or showing complete financial understanding are decreasing.

“Despite the credit crunch and economic downturn, the study reveals record highs in the percentage of students with credit cards, the number of cards they carry, and their average balance.  At the same time, more than half of college students express surprise over how high their credit card bills have reached,” the study notes.  Other findings:

• The average debt by student cardholders is $3,173, up 46% from the $2,169 average in 2004.
• About 84% of students have at least one credit card, up from 76% in 2004. On average, students have 4.6 credit cards, and half of college students have four or more cards.
• Seniors are graduating with average credit card debt of more than $4,700, up from $2,900 in 2004. Almost half carry a balance of more than $7,000.
• Only 17% pay their balance in full each month. About 22% make the minimum payment, 14% pay some cards in full and make the minimum payments on others and 7% pay less than the minimum payment.
• One-third use credit cards to pay their tuition, up from 24% in 2004. Other uses: food, 84%; clothing, 70%; and cosmetics, 69%.
• 60% are surprised by how high their balances have climbed.
• 40% have charged items even though they knew they didn’t have the money to pay the bill.
• Most students–58%–got their first credit card from a direct mail solicitation. Only 17% got a card with the help of a parent.

Bill Hardekopf, CEO of LowCards.com and author of the Credit Card Guidebook, said college students are an important target market because card loyalty starts at a young age.  Card issuers “also consider these loans to be a pretty good risk because parents usually bail out their children,” he added.

Nonetheless, Hardekopf continued, “These statistics are concerning, because these students will walk into the real world with a lot of debt from both credit cards and student loans.  It’s going to take some time and work to pay it all off.

“Since so many are just making the minimum payment, it will take them many years and a surprising amount of money to pay off a pizza, a shirt and some mascara.  Students must understand if they can’t afford to pay cash now, they can’t afford to buy now.”

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