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Graduates Leaving College With Debt
Auburn, May 12,
2002--Many college graduates are leaving college with more than
just a diploma these days. They are leaving with student loan and
credit card debt. In fact, most students are meeting their college
financial needs through student loans rather than grants.
In addition to student
loan debt, many college graduates also face the burdens of credit
card debt. One study shows that the average undergraduate has an
average balance of $2,700 in credit card debt.
College students are the
prime target group for credit card companies. Realizing that most
parents will help pay their college students' bills, card companies
heavily market cards to this age group. Studies also show that the
first credit card someone owns is usually used the longest and the
most.
Having a credit card
appeals to most students, but that appeal quickly fades when card
balances swell and card interest costs as much as the actual
balance, and that balance just doesn't seem to go down.
To avoid the credit
trap, parents and students need to work together to develop a
budget, says Robert White, a financial specialist for family
programs with the Alabama Cooperative Extension System. If a student
gets a card, a multipurpose credit card with no annual fee might be
the best choice, if the balance is paid in full each month.
Students who find
themselves in financial trouble can take simple steps to correct the
problem, adds White.
"First, stop
charging on the card. Take it out of your wallet so it is not
available. Second, pay more than the minimum payment each month.
Minimum payments are a way credit card companies trap individuals
into paying long-term interest."
Students who practice
smart credit card usage will face less stress and have more freedom
upon graduation than those graduates locked into monthly card
payments, student loan payments and living expenses. Expenses add up
quickly. Many students find that even though they have a good paying
job after graduation, once student loan, credit card payments and
major expenses are paid, there's not much money left over. That's
when good budgeting comes in handy.
SOURCE: Robert White,
Financial Specialist, Family Programs, Alabama Cooperative Extension
System, (334) 844-2235
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