Navigating student credit problems
When it comes to credit and debt, students are finding themselves in a variety of both favorable and not-so-favorable situations.
Many students here at Utah State University say they have too many expenses and not enough money to pay for everything.
“If someone doesn’t have a job, all they talk about is how much they need one. And those who do have jobs hate them but realize they have to work to pay for expenses,” said Aaron Brown, a pre-med student in business administration.
Tawnee McCay, director of the Family Life Center at USU, said debt problems come in a variety of ways, the most obvious being tuition, housing and book fees, but she also said a lot of students don’t understand the concept of credit and how big of a problem credit cards can be.
“It’s a hot topic across the nation,” she said.
According to a study done by the Consumer Federation of America in 1999, approximately 70 percent of undergraduates at four-year colleges possessed at least one credit card and carried an average balance of more than $2,000.
The study reported these large debts carry a variety of costs for the students. In some cases, students are forced to drop out of school and work full time, but even more devastating are the psychological troubles resulting from unsustainable debts. These problems can even result in suicide – such was the case with Sean Moyer.
According to the CFA report, Moyer was a National Merit Scholar and a freshman at the University of Texas.
Without his parents’ knowledge, Moyer had accumulated a debt of $10,000 on 12 different credit cards and eventually found it was too much to handle.
According to the report, “He told his mother that he had no idea how to get out of his financial mess and did not see much of a future for himself.”
A week later he committed suicide.
Where does a problem like this stem from?
McCay said most of the time it starts with naive students who are not taught good money-management skills by their parents.
“Freshman students are usually not used to living on their own, and managing money is a new thing to them,” McCay said.
She said most students will have a hard time paying off their debt but with good financial planning and wise decisions now, the impact might not be quite so large.
McCay said, one of the best places to start getting control of your financial situation is the Family Life Center, located on 700 East at the bottom of Old Main Hill.
The center offers a variety of seminars and classes ranging from financial counseling to marriage and family
therapy.
The counselors at the center, most of which are seniors or graduate students, are able to offer help in a variety of ways.
Counselors sit down with students and set up a budget using a new computer program called
Power Pay.
Power Pay can help to organize a method of paying off debts in the least amount of time using wise budgeting and financial planning.
McCay said most people are afraid to plan out a budget because they think they won’t have extra money for having fun.
She said although “life as a student is not a time of luxury,” a good budget can include money set aside for recreation and fun.
Terry Oliver, branch manager and vice president of the Zion’s Bank City Center office in Logan, agrees student credit problems are at an all time high and may be continuing to get worse. He attributes this misfortune to the recent economic decline and loss of jobs.
There are ways to prevent, or at least avoid, these unfortunate situations, he said.
“Co-sign with a parent or start establishing credit with a savings account instead of a credit card,” he said. “And be careful with the credit that you do get established so that you don’t find yourself in bad circumstances.”
The USU Financial Aid office also provides help and advice for students who find themselves short of needed funds.
Judy LeCheminant, director of the Financial Aid department, said, “We can get some kind of federal financial aid for anyone.”
Unfortunately, aid like Pell Grants and the Work Study program come on a limited, need-based program, but other types such as Stafford Loans and the Hope Scholarship are available to everyone, she said.
McCay said the best thing a student can do to avoid financial bondage is to start using a budget now and begin with their current income.
“The more you can do now on your own, the better,” she said.
Aaron Brown currently follows this advice and hopes to be able to stay debt free.
“The idea of paying for college is very intimidating,” he said. “I try to keep a budget and not go into debt and I feel like I am handling it pretty well.”