Up to their Ear-rings in Credit Card Debt
Presented at the Eighteenth Annual National Conference on The First-Year Experience February 22, 1999 Cheryl Beil Director, Academic Planning and Assessment The George Washington University
Table 1. National Statistics on Student Credit Card Usage
1997 College students with credit cards Average balance Undergraduates Graduates
*Source: Nellie Mae
1990 24%*
67%
$2,226 $5,800
$900 Not available
Table 2. Comparison of family income, financial aid, and unmet need between students who indicated it was important or not important to obtain a credit card to fill the gap between financial aid and college cost
Use of credit card to fill gap Important Estimated student budget Gross family income Gross financial need Institutional cap on aid Unmet need $30,000 $56,000 $18,000 $15,000 $3,000 Not important $30,000 $68,000 $15,000 $15,000 $0
Graph 1. Percentage of students who own at least one credit card
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
Total Freshmen Sophomores Juniors Seniors
Graph 2. Number of credit cards used
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Only one card 2 or 3 cards 4 or 5 cards 6 or more cards
Graph 3. Number of credit cards used by year in school
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Only one card
Total
2 or 3 cards
Freshmen
4 or 5 cards
Sophomores Juniors
6 or more cards
Seniors
Graph 4. Importance of reason for obtaining first credit card: Percentage who indicated each reason was important
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
Build credit history More convenient than cash Wanted more Easy to obtain Fill gap purchasing between power financial aid and cost of education Need for living expenses Free promotional gift Friends have credit cards
Graph 5. Credit card purchases made fairly often or regularly
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
Textbooks Essential clothing Vacations and Groceries and visits basics Non-essential clothing Restaurants and bars Entertainm ent Transportation Rent and utilities
Graph 6. Comparison of credit card debt between those who indicated it was important or not important to obtain a credit card to fill the gap between financial aid and college cost
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
None Less than $500 $500-$1499 $1500-$2499 $2500-$3999 $4000 or more
Use of credit card to fill in gap
Important Not important
Graph 7. Comparison of credit card purchases between those who indicated it was important or not important to obtain a credit card to fill in the gap between financial aid and college cost
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
Textbooks *** Essential clothing*** Groceries and basic expenses*** Vacations or visitations* Restaurants or bars** Entertainm ent Transportation around DC*** Rent*
Use of credit card to fill in gap
***p<.001 **p<.01 *p<.o5
Im portant
Not im portant
Graph 8. Comparisons between reasons given for working between those who indicated it was important or not important to obtain a credit card to fill in the gap between financial aid and college cost
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
Earn living expenses**
**p<.001 *p<.01
Help finance education**
Pay off credit card debt**
Earn spending money*
Reason was important or very important
Important Not important
Graph 9. Percent who indicated that paid employment impeded each area by whether it was important or not important to obtain a credit card to fill the gap between financial aid and college cost
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
Grades or grade point average**
**p<.001
Amount of coursework completed**
Happiness**
Undergraduate education**
Area was impeded
Important Not important
The Consequences of Easy Credit
Need credit card for living expenses .16 Total family income -.26 -.14 Grade point average
-.16 Institutional aid paid .46 Number of credit cards used
Credit Card Debt
.28 Average number of hours working per week
Chi-square (9, N=338) = 16.70, p < .054 Bentler& Bonett’s (1980) Normed fit index = .94 Bentler & Bonett’s (1980) Non-normed fit index = .93 Bentler’s (1989) Comparative fit index = .97