While over-spending and accumulating debt is not limited to the college student demographic, between keeping up with new trends, buying books and booking spring break vacations, the average university student holds their own in spending beyond their means.
According to the findings of recent nationwide studies performed by Nellie Mae and InCharge Institute of America, college students are ill prepared to handle their personal finances. Though schooled in spending, the average college student lacks knowledge about how to manage their money, the study said.
This is evident in a study conducted by Nellie Mae, an agency that grants student loans, which found that the average college student owes $2,327 in credit card debt. In addition, 21 percent of college students owe between $3,000 and $7,000. The study also found that graduating students have an average of $20,402 in combined education loan and credit card balance.
"I should maybe get rid of my credit card. It's too easy - you don't have to pay right away so it's easy to build up," said Lindsay Slojkowski, a first year MBA student. "I just had to take out a loan to pay off my credit card loans at a lower interest rate."
While credit card vendors may have aided these statistics by luring students with the prospect of "free cash," some students said they have been able to take charge of their own finances.
Nick Llados, a senior sociology major, said he keeps track of his spending by using a debit card instead of a credit card and checking his ATM receipts.
"It's not necessary for me to have to look at the bank statement to know how much money I have because I pretty much know the amount (because of the ATM receipts)," he said. "I don't spend a lot, so I think that would limit the chances of something happening."
Other students said they follow a similar plan.
Bailey Baleno, a junior double major in art history and computer art, said she uses a debit card rather than a credit card for her purchases, because a debit card can be used like a credit card, but deducts money directly from ones bank account.
"I can't get bad credit if it ever comes down to it," she said.
Christina Hartke, the assistant director of Agency Development with The Stewart Financial Group said that debit cards are good for controlling spending.
"Too often you think you will pay off the credit card and (you) don't," she said.
According to Hartke, there are drawbacks to using a debit card, which can be avoided if the owners pay attention to credit card company affiliates on the debit card.
"Some banks now charge a hefty fee for each debit purchase with a bank card so if using a bank card, make sure they have a Visa/MasterCard tied to them and when making purchases choose 'credit,'" she said. "It still comes right out of the checking or savings account."
While having a steady in-flow of money can help with the expenditures that credit cards seem to make so easy, some students said they would rather avoid getting caught in the credit card overspending web.
"I actually don't have a credit card," said Ryan Donnelly, a sophomore history major. "I don't want to use it and get into debt."
Based on the studies, students like Donnelly are atypical in that he does not own more than three credit cards and has kept his debt in check. More typical is Dominick DiCerbo, a junior linguistics major.
According to DiCerbo, since 2000, he has acquired ten credit cards and has had to reduce the number of cards he uses to two because he could not pay his bills.
"One or two cards with low credit lines is best," he said. "It keeps you from getting into too much debt too quickly."
In a recent study, The Bureau of Consumer Protection of the Federal Trade Commission found that one in eight adults fall victim to credit card fraud. This is one more factor that may weigh in on students abilities accurately to manage their personal finances.
Llados said he takes precautions against having his personal information stolen.
"I don't buy a lot of things over the Internet, which lessens the chance of my card number getting stolen."
Lee Lalka, a 49-year-old returning student majoring in social sciences with a minor in Korean, offers his opinions from the perspective of someone who may have more experience in managing personal finances than the average student in their late teens or early twenties.
Lalka advised students to check their credit reports as a precaution against identity theft. TransUnion, Equifax and Experian are three major credit-reporting agencies that offer credit reports, Lalka said.
Lalka also recommended that students take out loans to cover credit card debt. By using student loans to pay off credit cards, students are exchanging a higher interest rate for a lower interest rate.
"Consolidating is always a good idea," said Hartke. "However it depends on the current interest rates that person is paying for each loan opposed to the new rate; obviously we would hope that (the new) rate would be lower."
According to DiCerbo, who worked for a year in UB's financial aid office as a financial aid clerk, the interest rates on student loans is significantly lower than the rates on credit cards, sometimes two percent compared to 24 percent.
Students interested in finding better ways to manage their personal finances can visit Web sites devoted to the issue, such as www.sallymae.com, www.goodpayer.com, www.incharge.org, www.youngmoney.org, and www.lowermybills.com. Bank Web sites might also prove helpful, according to DiCerbo.
Students may also register for "How Come I'm Broke Already?" a workshop that is being held in the Student Union on September 24. Registration forms are available at http://workshops.buffalo.edu.
Photo: Meredith Forrest Kulwicki
