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Archive for Thursday, July 19, 2001

GAO issues report on student credit card debt

July 19, 2001

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— Many college students are crushed under a burden of credit card debt, which can cause serious financial trouble, particularly in repaying student loans, congressional investigators find in a study released this week.

Three lawmakers said Congress must take action and colleges should collect data on the role played by credit card debt in students' decision to drop out. An official of a university group said that would be extremely difficult.

"Consistent misuse of credit cards by college students, particularly combined with student loan debt, could lead to substantial debt burdens," the GAO said. "This problem could become particularly severe after graduation, when many students must begin making payments on education loans."

Roughly half of college graduates leave school with an average $19,400 in student loans, according to the report.

It cited previous studies showing that 63 percent to 64 percent of college students have at least one credit card in their name, of whom 58 percent to 59 percent pay their balances in full each month.

Some lawmakers and consumer groups have assailed the widespread marketing of credit cards to young people, especially college students, who often have no income or credit record. In the worst cases, critics say, students who run up big debts are forced to drop out and work full time to pay them off.

In some instances, suicides by college students have been attributed to their despondency over credit card debt.

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