UF Study Shows Many College Students Don't Manage Credit Cards Well

October 7, 1999

GAINESVILLE — A significant number of college students don’t manage their money well when it comes to credit cards, according to a new University of Florida study.

A survey of 217 UF undergraduates revealed that of the students who were responsible for paying their own credit card bills, 38 percent didn’t pay their balance every month. More than half of those students had a balance of $1,000 or more, and 1 in 10 had a balance exceeding $2,500.

“This is a very serious problem,” said Lisa Jamba-Joyner, who did the study for her master’s thesis in education while she was a graduate student at UF. “This isn’t just a problem while these students are still in college. If they leave college with both student loans and credit debt, it will be difficult for them to stay afloat, even with a full-time job.”

Of the students surveyed, 74 percent owned at least one credit card, and freshmen were just as likely to own one or more cards as seniors, Jamba-Joyner said.

“Freshmen are getting the credit cards as soon as they come on campus,” she said. “What’s more frightening is that incoming freshman will already have cards from high school.”

Jamba-Joyner also found that among the students she surveyed, women, minorities and students with lower incomes were less likely to pay off their credit card debts, as were people who owned more than one credit card.

Almost 60 percent of students surveyed said their parents paid off their credit card balance each month, which Jamba-Joyner said may be preventing students from learning valuable lessons about financial responsibility.

However, if parents enforce rules and make students pay for bad spending decisions, they still have the opportunity to teach their children valuable credit card lessons, said Stuart Pratt, vice president of government relations for the Associated Credit Bureau in Washington, D.C.

“It might allow the parent to have more oversight over student expenditures,” he said. “Students tend to make mistakes. A parent can make a student stay home and work all summer instead of going on a trip, for example, if he or she has made a bad financial decision.”

Parents and universities should work together to curb the problem of runaway bad credit, Jamba-Joyner said.

“Freshman orientation sessions are a good time to approach students about using credit cards wisely, and this is also a time when universities can talk to parents who give credit cards to students,” she said. “Schools should also expand the role of financial counseling.”

At UF, financial counseling officials are looking into establishing a program to help students with credit card debt.

“We have plans to do a lot, because student indebtedness is one of the biggest problems on campuses across the country,” said Patrick Piper, the administrative services coordinator of UF’s financial services office. “I cringe when I walk by the promotional credit card tables, and I know something has to be done.”

Students should consider using a check card or a secured credit card that requires a deposit of money, Jamba-Joyner said. Both types of card would prevent students from surpassing the amount of money they have available and therefore help keep their credit ratings top notch.

“You don’t need to own a credit card to build a good credit history,” Jamba-Joyner said. “If you do want a credit card, you don’t have to accept every application. There’s no need to have more than one.”

There’s nothing wrong with students spending money to have fun while they’re in college, Pratt said, but they need to be careful to keep their priorities in order.

“Messing up with credit cards has to do with your life down the road,” he said. “Pay your bills first and have fun next.”