DEAR ABBY: I'm writing to raise awareness about a serious and widespread problem -- student credit card debt. Young adults, who are often "credit card illiterate," are inundated with credit card offers once they set foot on college campuses.
Parents need to understand that their college-bound teens will be able to obtain multiple credit cards even if they have no prior credit history, no employment and no co-signer. Many students then face life-altering consequences because of excessive credit card debt, such as dropping out of school, defaulting on school loans, or graduating with a poor credit rating or looming bankruptcy. Credit card debt can also cause psychological depression and contribute to lower GPAs and increased substance abuse.
It is vital that parents educate their children about responsible credit card use BEFORE they leave for college. Financial literacy should also be taught in high schools so that young adults fully understand the costs of credit and the consequences of irresponsible credit card use. Students who graduate with poor credit ratings are likely to have difficulty renting apartments and receiving competitive-rate loans. They may even have limited employment opportunities.
Thank you for sharing this important information with your readers. -- CAROL A. CAROLAN, Ph.D., CENTER FOR STUDENT CREDIT CARD EDUCATION INC.
DEAR DR. CAROLAN: I hope both parents and students will heed your message. An important lesson learned last year by a college senior bears repeating. Read on:
DEAR ABBY: In my freshman year, I was bombarded with credit card applications promising great rates and free merchandise for signing up. I couldn't resist accepting, but promised myself I would use credit cards only for emergencies.
I am now about to graduate and owe several thousand dollars on my credit cards and have nothing to show for it. If I pay only the minimum each month, it will take me 12 years to pay off what I owe. I wish I had been given the following tips:
(1) Live within your means.
(2) If you cannot pay cash for a meal at a restaurant, do not eat out. Eat at the school cafeteria or make a sandwich.
(3) The new CD or DVD you want will still be around when you can afford it. Listen to the radio or rent a movie.
(4) Rather than going to a club or movie with a group of friends, find inexpensive activities (like playing cards or board games) and spend your evening enjoying them. You'll be amazed at what you can save.
(5) If your college offers a class on managing credit and credit cards -- take it! If you have already resolved never to rely on credit, it will reinforce that intelligent decision.
I hope you deem this letter important enough to print, Abby. Credit card debt is a huge problem for many college students. I should know; I'm one of them. -- COLLEGE SENIOR WHO LEARNED THE HARD WAY