|
Credit Cards For Tuition And Books? There Are Better Ways To Manage Student
Debt
By: Talbert Williams
The price of a college education has risen dramatically in the last ten years.
Prices of tuition, room and board and books have increased much faster than the
rate of inflation, and students and their parents have struggled to find ways to
pay for these increases.
A recent study by the Smith College Women and Financial Independence Program
found that nearly one quarter of college students are using their credit cards
to pay for some of their college expenses. This is a poor choice, as we shall
soon see.
Unlike a generation ago, most students today have at least one major credit
card. The lending industry has aggressively targeted college students and made
it very easy for them to obtain cards. The problem is that most people of
college age have relatively little money management experience and tend to use
the cards rather foolishly.
About ten percent of college students have balances on their credit cards of at
least $5000, and much of this debt is attributable to using the cards for
college expenses.
The main problem is the interest rate on credit cards, which tends to be much
higher than other borrowing choices for tuition. The Federal Stafford student
loan program offers rates for tuition in the neighborhood of 5%, and that’s
after an increase that recently went into effect. Five percent is a dramatic
improvement over the 20% or so that one might pay using a credit card.
Other options are available. Some universities will allow payments; students
should inquire to see if they can simply pay on installments. Even if interest
is added, it undoubtedly will be a less expensive option than paying by credit
card. There are student loan programs available for the parents of students at
favorable rates that are only slightly higher than those for Federal student
loans.
Students need to understand how to use credit cards responsibly. The best use
for credit cards is for a purchase that can be afforded immediately, not a long
term purchase. Buying textbooks with a credit card is OK as long as you can pay
the bill when it comes at the end of the month. Putting a semester’s tuition on
the card, with no idea as to how or when it might be repaid, is a poor choice.
Students who develop bad spending habits early are more likely to have problem
debt down the road, and may be headed towards early bankruptcy as their spending
hurts their credit report.
Anyone who has questions about how to effectively pay for education expenses
should contact his or her school’s administration. They can point out which
department or departments may be able to help assist with expenses in a way that
won’t drive students straight into a life of problem debt.
About the Author:
Talbert Williams offers debt consolidation, debt reduction, credit card debt
referrals and advice. For more information, articles, news, tools and valuable
resources on debt solutions, visit this site: http://www.1debtfreedom.com
|
