Thursday | February 09, 2012
Student Spending is Cause for Alarm
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By
Mike Madias
11 March 2004
(U-WIRE) DETROIT – Some university students believe that it is difficult to manage the financial responsibilities needed to pay for a college education. Despite generous increases in financial aid allotments, it is likely to require more planning and more work to pay for a college education now than it was in the past, and may be even more difficult in the future. Direct financial aid is usually supplemented by money that students will have to earn or that they must borrow.
"One of the biggest crises with today’s college student is debt. Students must learn to manage their debt and/or stay out of debt," said Dr. David Strauss, Wayne State University dean of students.
But most students are not wealthy enough to stay out of debt. They need to borrow. Usually loans are part of a financial aid package. These loans are at below market rates and have terms that are so generous and forgiving that they require little discipline of management. As long is the paperwork is kept current, paying them off can be deferred for years.
Because these loans are so easy on the borrower, they do not teach a person how to manage debt. If a student owes $15,000 in student loans he or she may not feel overwhelmed. However, if a student owes $5,000 on a credit card, they may be in serious trouble.
Where the lender of a student loan will renegotiate and make accommodations, a credit card company will not.
"Credit card debt is at an all time high with college students and it is an epidemic," Strauss said. "Students are drawn in by high (credit) limits and introductory low interest rates, but then (after the introductory period) the rates go up.
"Students are also drawn in by the free gifts. Wayne State does not allow credit card vendors on the campus for these very reasons. In earlier years it was usual to have credit card venders offering small gifts to those who filled out applications."
Some students even get sucked in on the other end by convincing their peers to sign up so they can reap the benefits of commission for every person that was accepted for a VISA, MasterCard or American Express.
Even now, promotions for credit cards are on classroom bulletin boards, in nearby restaurants and bars and solicitations fill mailboxes.
But students do not have to fear or be repelled by credit cards. Sooner or later, one is going to have to learn how to use them, and college is a good time.
By buying books and clothes for the start of the school year on credit, and spreading out the payments at 10 percent of the balance paid every month, students will build their credit standing and not get into trouble.
"It is difficult to manage debt and the university talks with students and counsels students about debt. The office of Scholarships and Financial Aid as well as the Office of Counseling and Psychological Services works with students in this area. In addition, the Dean of Students office plans to present debt management workshops in the winter semester," Strauss said.
Copyright ©2003 The South End via U-Wire
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