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College Students and Plastic Money: Costs of Student Debt

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Introduction

College Students and Plastic Money: Costs of Student Debt During 1997-1998, two students committed suicide because of credit card debt. The problem of credit card debt and college students are increasing and has been discussed in mass media to draw people's attention to the negative social effects of college student credit card debt. Many students want to own a credit card because of a belief that they will get benefits to establish a credit card history which will help them get loans or any other credit in the future, and it is not difficult for them to get one. However, lack of financial knowledge causes students to get into debt easily because they do not "realize how quickly interest can compound or how important it is to read the fine print of credit card offers" (Hildebrandt). Casey Perkins, a college student, said from her experience, "I didn't really understand how a credit card worked. I didn't know that if I didn't pay my entire bill at the end of each month I'd receive a finance charge" (61). Even though many students like to use credit cards for emergencies or necessities such as tuition fees or books and they think they can pay the debt off when they have a job, with credit cards, students tend to spend more ("The Danger of Credit Cards"); "the availability of credit cards has profoundly changed a typical student's consumption patterns" (Manning, 170). ...read more.

Middle

in Manning 160). Stress also can cause family problem betweens children and parents who help students pay debts. Some students who get into debt are "too embarrassed" to tell their parents because they think they can take care of the expenses by themselves and they do not want their parents to worry about their problems (Perkins 61). Furthermore, family tension can happen from "unapproved behavior" of students who acquire credit cards without "parental consent" to "conceal their social, sexual, and consumption activities" (Manning 192). Another unpleasant consequence of stress from credit card debt is student suicides. Faced with credit card debts, students will get stress and depression, and even commit suicide. As a result of credit card debt, many students need to work extra jobs to pay their debts off and it causes students' education decline. Students who are deep in debt have to work more to pay their debts off, and working many jobs "may lead to deficient grades and loss of scholarships and other financial aid" (Manning 177). Some students are forced to drop some courses and increase time in work or leave school to work full-time in order to pay debt. The research shows that working full-time or part-time off campus has a negative effect of degree completion and college GPA and working more than 15 hours a week has a negative effect on students' likelihood of staying in college ("Spending Habits" 2). ...read more.

Conclusion

Students who are in debt get stress from managing their debts, which can lead to physical and mental health problems. Debt destroys students' education because, to pay debts off, many students have to drop courses or leave school to work extra jobs. Debt also has bad effects on students' futures because of the poor credit histories which will make it hard for students to find good jobs or get any other credit. Students easily get into debt because of their owning credit cards without financial knowledge, so colleges or universities should provide personal finance programs for students and parents can teach their children learn how to manage money or debt. "There has been greater attention to the role of colleges and universities in promoting complacent attitudes toward personal debt and to the need for effective credit card education and financial literacy programs" (Manning, 162). Pinto and Diane Parente, assistant professor of management in the Penn State Erie School of Business, agree that "education is necessary" (qtd. in Kienzle). It is important to understand how to use credit because it is "one of those mandatory life skills" (qtd. in Hildebrandt). Banning college students from having or using credit cards is not a solution for student credit card debt. Giving students financial education is a good way to help students control and manage their spending. However, students should not get a credit card easily, so credit card companies should limit the applicants to those who have an ability to pay credit off. - 1 - ...read more.

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