April 15,2009
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News: Campus Credit Card Concerns.
There is rising concern over escalating student credit card debt on campuses across the country. Rising tuition costs and living expenses are leaving college students more and more dependent on credit card usage. Ryan Simmons from College News (CN), a premier publication for college students, reports that Sallie Mae, a major lender in student loans and savings plans, released results of a major study evaluating student debt. The report indicated that the average undergraduate student has the highest credit card debt since data became available in 1998. The research shows student average debt amount rose to $3173 in 2008, a 46% increase from the number in 2004. Additionally, their study indicates a positive correlation of credit card debt to student grade level. Seniors' average debt increased 44% since 2004 while freshmen realized a 27% increase. These numbers represent data collected in March of 2008.
Since that time, students have experienced less availability of student loan funds forcing them to rely even more heavily on their credit cards. In the same vein, CN also reports that college endowment funds are also down. The Common fund suffered nearly a 25% loss by end of 2008. This places additional burden on higher education institutions to increase fees and tuition. President Obama has proposed a plan that would have private loan companies generate student loans and then turn them over to the Education Department for a minor fee. The Washington Post reports that debate continues to grow over the President's proposal that could make tuition funds more available thereby alleviating the need for students to rely so heavily on credit cards. Others feel the plan will place an additional burden on the government by requiring it to regulate and monitor still another banking institution.
Despite all the controversy over the President's plan, something's got to give. South Carolina's Sen. John Scott (D-Columbia) advocates making credit cards less available to students with his proposed legislation that would limit on-campus marketing activities by credit card representatives. Scott's bill would also require students be given literature covering the dangers of credit card debt whenever making purchases in schools' bookstores. Whatever the solution, it must be addressed quickly and it doesn't appear things will go smoothly for the President in the chambers.