Report: Students using high-interest credit cards to finance education
Scott Travis and Missy Diaz, Sun Sentinel
Issue date: 4/15/09 Section: News
FORT LAUDERDALE, Fla.-College students are using credit cards more than ever to pay for their education, and they're carrying high balances on those cards, a new report suggests.
Students who used credit cards for tuition, books and other direct college expenses last year charged an average of $2,200, up from $942 four years ago, according to the survey, conducted by private lender Sallie Mae. The study suggests that students are using credit cards instead of other financial aid, including grants and private loans.
About 30 percent of students put tuition on their credit cards, up from 24 percent in 2004, when the study was last conducted.
The survey states that 92 percent of undergraduate holders of credit cards charged textbooks, school supplies or other direct education expenses, up from 85 percent in the previous study.
"Too many students are at risk of overpaying for college by pulling out credit cards to pay for textbooks or even part of their tuition bill, instead of using less-expensive financial aid to cover these items," said Marie O'Malley, director of consumer research for Sallie Mae and author of the study.
One Florida Atlantic University graduate, for example, is struggling to pay off thousands of dollars in credit card debt.
Josef Palermo, 24, graduated from FAU in Boca Raton last year and now lives in Washington, D.C. He used three credit cards to pay for tuition, books and living expenses. Interest rates were as high as 18 percent, he said.
He had maxed out his federal student loans and found credit cards quicker and easier than seeking private loans.
He declined to discuss the amount he owes but said it's overwhelming.
"I wonder if I'll ever be able to get a home of my own with the kind of debt I have now and the marks against my credit," said Palermo, who has a job. "I worry about my future."
More students at Palm Beach Community College are using credit cards to pay for tuition, Controller James Duffie said. It's now the top way to pay, he said. Much of that is due to the growth of online payments.
Students who used credit cards for tuition, books and other direct college expenses last year charged an average of $2,200, up from $942 four years ago, according to the survey, conducted by private lender Sallie Mae. The study suggests that students are using credit cards instead of other financial aid, including grants and private loans.
About 30 percent of students put tuition on their credit cards, up from 24 percent in 2004, when the study was last conducted.
The survey states that 92 percent of undergraduate holders of credit cards charged textbooks, school supplies or other direct education expenses, up from 85 percent in the previous study.
"Too many students are at risk of overpaying for college by pulling out credit cards to pay for textbooks or even part of their tuition bill, instead of using less-expensive financial aid to cover these items," said Marie O'Malley, director of consumer research for Sallie Mae and author of the study.
One Florida Atlantic University graduate, for example, is struggling to pay off thousands of dollars in credit card debt.
Josef Palermo, 24, graduated from FAU in Boca Raton last year and now lives in Washington, D.C. He used three credit cards to pay for tuition, books and living expenses. Interest rates were as high as 18 percent, he said.
He had maxed out his federal student loans and found credit cards quicker and easier than seeking private loans.
He declined to discuss the amount he owes but said it's overwhelming.
"I wonder if I'll ever be able to get a home of my own with the kind of debt I have now and the marks against my credit," said Palermo, who has a job. "I worry about my future."
More students at Palm Beach Community College are using credit cards to pay for tuition, Controller James Duffie said. It's now the top way to pay, he said. Much of that is due to the growth of online payments.
Be the first to comment on this story