Students battle debt

More students find themselves acquiring credit card debt.

Freshman Cris Dorman really wants an MP3 player. So he signed up for a credit card hoping to win the player free in a drawing.

"Honestly, I'm just going to throw it (the card) away," he said as he shrugged. Dorman, who noticed a credit card booth at the Scramble Light and already had a VISA checking credit card, said he sees no problem with having one.

"If you can manage it responsibly, it's good (financial) security," he said. "I can manage my money fine, and I haven't had any problems."

With each card, Dorman contributes to the increasing number of college students buying with plastic.

According to a study by Nellie Mae, a national provider of student loans, 83 percent of college students had a credit card last year, up from 67 percent in 1998.

Those students accrued an average credit card debt of $3,066 in 2001.

"College students tend to get bombarded with credit card solicitors, trying to get kids hooked," said Grace Worley, president of Worley Financial Group. "Young people tend to be significant consumers."

To avoid the onslaught and step off on the right foot financially, Worley outlined three steps students should take:

n Learn to plan a budget. Know how much you have and how much you need to spend.

n Only purchase what you know you can pay off at the end of the month.

n One credit card is enough.

"The problem is credit is so easy to use. With a piece of plastic you can walk away with anything," Worley said.

"A credit card is a form of convenience, not a ticket to nirvana," she said.

Elaine Bedel - president of Bedel Financial Consulting, Inc., a financial planning corporation in Indianapolis - said she believes credit cards can serve as an asset.

"Credit cards are one of the best financial tools," she said. "It's a good way to do your business (and establish good credit)."

She didn't recommend credit cards for college students, however, especially incoming freshmen.

"Most students don't understand the responsibility of having one," Bedel said. "They've got to use it wisely. It might be a real burden and could hurt them in the future."

"It's silly to get involved in that," she said.

Most credit card companies target incoming freshmen with gimmicks, said Lee Spector, associate professor of economics, and students play along because they never expect to use the card.

"They give you a bottle of Coke and a free T-shirt along with a credit card," Spector said. "But then they (students) have it and say, 'Ah, might as well use it.'"

One credit card solicitor, required to remain anonymous according to his contractor's rules, worked the Scramble Light almost every day, and he thought nothing of giving students the opportunity to buy credit cards.

The solicitor travels to campuses across the country, getting paid a flat rate by local banks to sell credit cards to college students. He uses his money to pay his way through graduate school.

"If you're old enough to go to college, you can have a card," he said. "You're offering kids the chance to start a good credit history, and what they do with it is up to them. You're a big kid now and should be able to handle it. If you can't, it's not my fault."

When buying a credit card, John Horowitz, associate professor of economics said, students needs to think of the future.

"Credit is a wonderful thing, but credit cards allow you to spend your future income," he said. "If you start (using a credit card) when you're younger, you can start being a responsible individual with it and have a good chance of getting good credit."


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