Credit Card Burden, College Scholarships And Credit Reports
Saturday, February 20th, 2010
When a college student leaves college they often take a lot of debt along with their shinny new diploma. Hopefully they took out student loans, received scholarships or grants to pay for their school. Free scholarships and grants can save a lot of financial pain for students in the long run and there are plenty of them out there for students that no where to look for them. Student loans have very reasonable interest rates (around 6 percent) and don’t start adding interest until after the student graduates. Unfortunately, most college students (84 percent) have credit card debt! This is an unfortunate and major problem, more students than ever are taking on credit card debt and they are also carrying larger balances (source: Sallie Mae). With many states cutting back on their higher education funds in 2010, this problem looks like it’s going to get much worse before it gets better and our nation’s students seem ill informed about the consequences, such as compounding interest and a bad credit report score.
With 25 percent interest rate applications in hand the credit card companies blanket our nation’s campuses. The thousands of inexperienced, financially strapped and even foolish students make college campus’s a gold mine for the credit companies and they feverishly compete to get their cards in the student’s hands. They set up at unions, sporting events and outside of the classes. Offers abound, students are given free T-shirts and pizza coupons to sign up. Some students get caught up in attractive introductory offers. Seemingly great terms entice the students into signing up, such as 0 percent interest for the first 6 months. The students inevitably fail to read agreements in full and rush off to another class with their free T-shirt. College students notoriously neglect to read the fine print so the credit card companies offer interest rates that skyrocket after a few months.
Apparently our nation’s future leaders just don’t know any better. Perhaps they see their friends using credit cards, buying things and having fun. The financially strapped students probably know it’s a bad idea in the back of their minds, but decide to get a card anyhow. They assume that once they graduate they will be making the big bucks, a risky assumption. Some students probably do it out of necessity; college is extremely expensive after all. Frankly, a lot of students are just plain broke. With college tuitions rising and the shrink pool of available scholarships and grants it’s easy to see why.
Regardless our nation’s students are receiving very expensive lessons in personal finance. Students going off to college need to be taught to read the fine print and to take the time to find a card that will work for the purposes they need. In short they need to look at the long term, and financing any proportion of college with credit cards is a risky proposition. Many students are finding themselves in massive debt, often too much for them to cover, forcing them to repair their credit scores as they enter the work force. So students please, keep an eye on your credit scores, keep an eye out for scholarships and keep away from those awful cards they are pushing on you! You don’t want to be looking at a bad annual credit report ten years down the road for mistakes made in college!
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