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Data shows students charge average of $2,200 in direct education expenses


RESTON, Va.—Despite the credit freeze, college students last year used credit cards more than ever before, including charging tuition and other direct education expenses, according to a new study from Sallie Mae, the nation’s leading saving- and paying-for-college company. The report, “How Undergraduate Students Use Credit Cards: Sallie Mae’s National Study of Usage Rates and Trends, 2009,” is the fifth in a series conducted since 1998 through the company’s affiliate Nellie Mae which analyzes the credit card use of student loan applicants.

Nearly one-third (30 percent) put tuition on their credit card, an increase from 24 percent in 2004, when the study was last conducted. In total, 92 percent of undergraduate credit cardholders charged textbooks, school supplies, or other direct education expenses, up from 85 percent in the previous study. Students who used credit cards to pay for direct education expenses estimated charging $2,200, more than double 2004’s average of $942.

“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. “Students and families need to build a comprehensive budget ahead of time to cover not only tuition, but also other necessities like supplies and travel costs that contribute to the overall cost of college.”

Eighty-four percent of undergraduates had at least one credit card, up from 76 percent in 2004. On average, students have 4.6 credit cards, and half of college students had four or more cards. The average (mean) balance grew to $3,173, higher than any of the previous studies. Median debt grew from 2004’s $946 to $1,645.

The higher the grade level, the more heavily students used their credit cards, with seniors graduating with an average credit card debt of more than $4,100, up from about $2,900 in 2004. The study found that freshmen carried a median debt of $939, nearly triple the $373 in 2004. Only 15 percent of freshmen had a zero credit card balance, a dramatic drop from 69 percent in the 2004 study.

Many college students seem to use credit cards to live beyond their means—not just for convenience—and more than three-quarters incurred finance charges by carrying a monthly balance.

The study found that:

* Sixty percent experienced surprise at how high their balance had reached, and 40 percent said they have charged items knowing they did not have the money to pay the bill.
* Only 17 percent said they regularly paid off all cards each month, and another 1 percent had parents, a spouse, or other family members paying the bill. The remaining 82 percent carried balances and thus incurred finance charges each month.

Two-thirds of survey respondents said they had frequently or sometimes discussed credit card use with their parents. The remaining one-third who had never or only rarely discussed credit cards with parents were more likely to pay for tuition with a credit card and were more likely to be surprised at their credit card balance when they received the invoice.

Eighty-four percent of undergraduates indicated they needed more education on financial management topics. In fact, 64 percent would have liked to receive information in high school and 40 percent as college freshmen.

Sallie Mae published the report to underscore the importance of educating college students about using credit effectively, weighing their spending decisions and considering their source of borrowing. To conduct the study, researchers analyzed aggregate credit bureau reports for a randomly selected group of 1,200 student loan applicants. In addition, surveys were sent to 5,800 undergraduates, of which roughly 5 percent responded. The full study is available online at


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