Students and Debt

By: Ilona Horvath

According to the Department of Labor Statistics, the average annual inflation rate of college tuition and fees is up 8.7 percent over the last twenty years which is more than the annual average annual inflation rate.

With that said, is it any wonder that student debt has also been on the rise in recent years? And that’s not just credit card debt. An online article in the USA Today posted in November of 2006 revolving debt (credit card), student loan and installment debt (auto loans) have also increased significantly since 2001.

Besides the rising costs of education, other contributing factors include credit card companies that use advertising that explicitly target the student body. Cardoffers.com is a website that lists a variety of credit cards with a multitude of special offers.

According to this site, the mtvU Platinum Select Visa is a card specifically designed for the college demographic and rewards students for using their credit wisely and receiving good grades. Unfortunately, what most students fail to see, however, is the interest rate information, which, in this case, happens to be almost 20 percent, which, is what the website calls “above average” for an alleged student credit card.

Additionally, although College Board’s annual report shows that 134 billion dollars in financial aid has been made available to students (a 3.7 percent increase) for tuition and fees, most of it has been given in the form of unsubsidized loans rather than grants which has only served to aid in the downward spiral of student debt.

What’s more, many college students feel that had they only been informed they might have known better. “I was never taught how to manage bills. I thought credit cards meant free money,” said Julio Perez, a student at Valencia Community College. “I didn’t know what the interest rate meant so I just spent the money and, at first, I tried to pay what I owed with my financial aid refund checks, but,” went on Perez, “after the checks stopped coming, I went into debt.”

Another student at VCC, Raphael Rodriguez said “You don’t know what to look for, like, with my card, I never checked and it was like “outta sight, outta mind” and, before I knew it, they submitted me to collections.”

So, what are college students these days doing to take care of their debts? Regrettably, many students are forced to choose between full-time student status and holding down, at the very least, a part time job. According to the Center for Economic and Policy Research, of students who took out a loan in 2003-04, 83.6 percent held down a job in which they worked at least 22.8 hours per week and attended school.

As a result of high debt loads, a poll by USA Today and The National Endowment for Financial Education shows that 60 percent of the college age group feels higher levels of anxiety than their age group has in previous generations and student debt is on the rise as we speak.