Study: More students paying college expenses with credit card

Charge it. That’s often a term you’d expect to hear at the mall, but what about at the Office of Financial Services?

As studies show an increase in the number of college students using credit cards to pay for college expenses, the university has seen the opposite, following the implementation of a 2.75 percent convenience fee last summer, said Brad Davis, business systems analyst for Financial Services.

“Before the fee was fixed to credit card payments, that was probably the case,” Davis said. “But now that there’s a convenience fee associated with credit card payments, we’ve seen them drop dramatically. I would say we do not fit that mold when it comes to direct payments.”

Davis said he didn’t have numbers substantiating the trend.

According to a study conducted by the student loan provider Sallie Mae, more and more undergraduates are swiping credit cards to pay for common college expenses like tuition and books, and consequently increasing their debt. The study reports that college credit cardholders estimate charging $2,200 to pay for direct education expenses, up from $942 in 2004.

Patricia Nash Christel, director of corporate communication at Sallie Mae, said the study indicated several possible reasons for the increase, including poor financial planning and the overall convenience of credit cards. Nash Christel said planning ahead is usually an effective way to manage finances.

“We think this points to the need for more advance planning with your family,” Nash Christel said. “A more comprehensive approach looking at what you’re going to need; just thinking more broadly like you would when building any kind of family budget.”

Davis said the university probably doesn’t reflect the survey results because the survey was most likely geared toward students who pay their own way through college. He said he thinks TCU has more students whose parents are paying for them than students who fund themselves, but the university has no way of determining whether a student or a parent is making the actual payment.

Many students often see credit cards as a last resort, but Nash Christel said the study was conducted to show that there are other ways to pay for school.

“We did the study in order to highlight the availability of other types of financial aid,” Nash Christel said. “I want to urge students to be sure they’re doing all that they can to look for that free money, those scholarships and grants that are available.”

Derek Flory, a math and radio-TV-film major, said he doesn’t own or use credit cards just because of the chance of going into debt or ruining his credit.

“I steered clear of credit cards,” Flory said. “I made sure I got loans and the rest of my school is paid for through scholarships and grants. I’ve never had a credit card and I don’t really want one at this point.”

The report found that 84 percent of the participants said they need more education on financial management and credit cards. It also showed that students who talked with their parents about credit cards were less likely to overuse them and were more prepared to make payments.

Jason Hammack, a freshman neuroscience major, said his parents did talk to him about the responsibilities of using a credit card so he uses it cautiously.

“My parents told me to build my credit by spending the minimum and then just make sure to make payments on it,” Hammack said.

Hammack said he uses loans instead of credit cards to pay for school expenses because of the option to hold payments until after graduation.

The study also found that 40 percent of undergraduate credit cardholders said they charged items knowing that they did not have the finances to pay the balance.

“I would recommend students to think ahead about the form of payment,” Nash Christel said. “Any financial adviser would urge students or anyone else to think twice about using a credit card for items that are disposable.”