From understanding credit card solicitations to budgeting student loans, too many students are unprepared for the financial challenges of college life. Most high schools and colleges offer no required financial literacy curriculum, even as higher education costs rise faster than financial aid awards.
Further, the debt load of today's young adult is exponentially higher than their parent's generation. In fact, there has been a threefold increase in average inflation-adjusted debt levels since 1991. Consider the following:
- Up to one in three college students graduate with over $10,000 in credit card debt, in addition to student loans.
- The average student loan debt has now surpassed $20,000 for an undergraduate degree - a figure that excludes popular "private" loans that may have much higher interest rates.
- Up to three in five first-year college students max out their first credit card within their first year on campus, starting a cycle of unintended debt each year until graduation.
- 60 percent of first-year students report that "financial problems" interfere with their schoolwork, 30 percent report "financial problems that are very distracting and troublesome."
- Rates of financial stress are higher for minority and first-generation college students.5 Many first-generation students also come from backgrounds in which access to credit has been non-existent, leaving students with no source of reliable financial advice.
- 55% of students reported using their credit cards for "day to day purchases" and 40% report using credit cards for "weekends and pizza".
- One in four college students have paid a late fee.
- Nearly 3 in 4 college students believe it is acceptable to use credit cards for living expenses.
- Indebted adults between the ages of 18 and 24 spend almost 30 cents of every dollar earned to repay debts.
- Employers are increasing checking credit reports for new college graduates and using the reports as key criteria in hiring decisions.
Source: Decision Partners