October 31, 2003 :: Oklahoma Students Get Some Credit in Statewide Credit Card Study
A recent statewide survey of Oklahoma college students has revealed that many students possess several credit cards and are thousands of dollars in debt.
Those findings were just a small part of the information gleaned from a study by Dr. David Tan, director of the consortium-based Center for Student Affairs Research (CSAR) located at the University of Oklahoma. The complete findings were presented to the Oklahoma State Regents for Higher Education during their regularly scheduled meeting Thursday.
More than 4,000 Oklahoma college students participated in the study, which was overseen by the Council on Student Affairs (COSA) and supported through a grant from the State Regents. In addition, colleges and universities helped finance the study by joining the CSAR consortium.
COSA serves as a key advisory council to the Chancellor, State Regents and their staff and other state officials regarding issues and policies affecting the welfare and development of students enrolled in the Oklahoma higher education system.
The purpose of the study was to (1) determine the seriousness of credit card indebtedness of students; (2) examine what types of consumer credit card education program state colleges and universities have in place; and then (3) ultimately recommend strategies to inform students of the pitfalls of having too much credit card debt.
“Owning a credit card is an enormous responsibility for any individual, let alone a college student,” Chancellor Paul G. Risser said. “If used properly and wisely, credit cards can help students build a good credit history that will be valuable to them once they begin their careers. I am hopeful that our colleges and universities, students and financial institutions really examine what this study shows and seriously consider implementing the recommendations that were made.”
According to the study, the students surveyed owned an average of two major credit cards and had incurred an average debt of $2,607, compared to a national average of three to four cards and a debt of $2,748.
Nearly half of the surveyed students indicated that they owned at least one major credit card before college. That figure jumped to more than 90 percent by the end of their sophomore year. In addition, they stated that pre-approved solicitations from credit card companies and general mail solicitations from banks and other financial institutions influenced their decision to obtain their first and subsequent credit cards.
Despite possessing multiple numbers of major credit cards, most of the students in the study understood the importance of making their monthly payments and making them on time. Many even indicated that they paid their credit card bills in full or more than the minimum required each month. About a quarter of those surveyed responded that they paid just the minimum or were behind in their monthly payments. National comparisons show that up to 25 percent of students have problems repaying their debt.
A concern revealed in the study was that credit card debt negatively affected students’ studies and extracurricular activities, as well as their decisions to reduce course load or remain in school in order to pay off debt. Most students also stated that they were unsatisfied with existing programs at their college or university that are aimed at helping them understand financial responsibilities, debt management and credit card use. In spite of those feelings, they blamed themselves for their indebtedness and not the credit card companies or college they attended.
To address the study’s findings, COSA and the CSAR consortium are recommending that colleges and universities:
- continue to be vigilant and innovative in educating their students about credit card debt;
- work with younger students in alleviating or eliminating their existing and future problems with credit card debt; and
- require credit card companies and marketers to fund educational programs on credit card use and abuse before being allowed to solicit on campuses.
Since the state and higher education institutions can do little to regulate the credit card industry, COSA and CSAR are urging credit card companies to be more prudent in targeting college students as new customers, including tightening credit card requirements on potential applicants and showing restraint in issuing more credit cards or increasing credit limits upon request.
COSA and CSAR are encouraging parents to educate their children about credit card use and financial responsibility even before they leave home for school. They also recommend not using credit cards as a means to pay for college but instead pursue other avenues. They want college students to understand that credit card use has both advantages and disadvantages, which could ultimately affect their collegiate experiences and financial futures. And finally, they want students to understand that credit cards are not sources of “free money.”
“Credit card debt can be a major stumbling block for many students who are pursuing a college degree. They must understand that accumulating large amounts of debt could have negative consequences not only for them but their families as well,” State Regents’ Chairman Ike Glass said.
“Our colleges and universities must be diligent in their efforts to educate their students about credit card use and provide them with resources that will enable them to make wise choices.”