Credit cards are a major source of debt for many college-age Americans. With every new semester, more students sign up for credit cards and student loans they can’t afford.
According to Pew Research Center, 58% of adults between 18-29 years old use credit cards to pay for unexpected expenses. With the beginning of a new semester, college materials like books can be far more expensive than expected. Another survey by Pew Research Center states that young households with student debt are much more likely to have additional car loans and credit card debt.
Debts are growing for households that have student loans to pay.
“I tend to get myself in other types of debt because of my student loans. I tell myself that I am already in a bad place with my student loans, so another small one can’t hurt,” says Norberto Montan, a student currently paying off a variety of loans.
Brianna Johnson, a student at Utah Valley University, says student loan debt has forced her into other types of debt.
“By the time I’m done with school, my student loan payments will be higher than my car and insurance payments, so the worst part hasn’t [even] hit yet,” says Johnson.
Students also use their credit cards to pay for their student loans.
“Sometimes when my student loan payment comes up, I have to put it on my credit card,” says Johnson. “I’m a full-time student, and I don’t have enough money from student loans to pay for books, fees and parking permits, so I always put it on my credit card. You can’t survive on a minimum wage job, and sometimes you don’t make enough to cover for gas or food. Everything else has to go on a credit card.”
Another study by Pew Research showed that young households that borrowed for college are less likely to be satisfied with the outcome of their education and are less likely to feel like their educations have paid off. This is influenced by both student loan debt and other types of debt like credit cards, car payments, personal loans and mortgages that the graduate will most likely have after finishing their degree.
Further research by Pew Research indicates the main issue with credit card debt is that people don’t know how to use them and don’t know about interest, which causes Americans to sink deeper in debt.
The state of Kentucky released an initiative to help its residents have a healthier financial life. Starting with ninth graders, Kentucky requires a completed financial literacy course to graduate. This will likely teach students how to save money, manage their credit and craft a budget.
“When I got my first credit card, I used it a lot because I didn’t know about interest and I thought that I could just pay what I used,” says Andrea Prussing, a student at the University of Utah. “I thought that I was able to use it and then pay for it whenever I could, but it wasn’t that easy.”
Knowing how credit cards and loans should be used is an important part of a healthy financial life.
“Student loans are dangerous, and a lot of people are scared of asking for help,” says Rylie Grissetti, a SLCC student who works for a bank and has experience working with loans and credit cards. “People are always learning how to use credit cards, but they should always treat it as a debit card and not use it if they don’t have the money to pay.”
Grissetti spoke further about how people view loan and credit card companies.
“People think that [loan and credit card] companies are money hungry, but a company would rather work with you internally instead of losing you to a collections company,” says Grissetti. “This also benefits the company because you attract more bees with honey, so they most likely will find a way to work with you.”
As students have mentioned, the cost of education is increasingly difficult to cover. With little in the way of financial literacy for many college students, many are prone to accruing more debt than they can handle.
According to Debt.org, as of 2017 students have amassed nearly $2 trillion in debt, six times the amount of student debt accrued in 2004. The inability of students to pay for these loans will most likely affect their future.
Visit the SLCC Financial Aid Office for help on how to finance your college education.