More students than forecasted are acquiring credit cards. And they’re racking up more debt than they can afford, according to a study by Robert Manning, a sociologist at Georgetown University in Washington, D.C. The study, released by the Consumer Federation of America, also in Washington, D.C., not only shows how previous research underestimated the extent of debt and related problems but also how aggressively and effectively some credit card issuers are marketing on campus.

According to Manning, many colleges and universities not only permit aggressive credit card marketing but actually benefit from it. That’s because some credit card issuers pay institutions for sponsorship of school programs, support of student activities, rental of on-campus solicitation tables, and exclusive marketing agreements such as college affinity cards.

The study shows that mounting debt is taking its toll, as students with unsustainable debts are forced to cut course loads and increase work hours to pay off debt. In fact, in 1998, the University of Indiana reports it lost more students to credit card debt than to academic failure.

Here’s what the study found:

• In 1998, 81% of students had received
   a first credit card by the end of
   freshman year, compared with
   66% in 1994.

• 70% of undergraduates at a four-year
   college possess at least one credit card.

• Revolvers—those who carry balances on
   their cards—have average balances
   of more than $2,000.

• 20% of revolvers carry debts of
   more than $10,000.

• Some students have refinanced credit card
   debt with student loans or private debt
   consolidation loans, making the average
   college loan debt for graduating seniors
   at some schools more than $20,000.

By the way, credit card annual percentage rates at credit unions average three and one-half percentage points less than credit card rates at banks. Credit union credit card fees typically are lower than those at banks, and credit unions typically allow five more grace days than do banks. So, go easy on your pocketbook: Contact your credit union for an affordable card and ideas for managing credit.

©1999 Credit Union National Association Inc.