When it comes to the idea of college student money management, there tends to be a lot of mistakes made year after year. The two biggest money mistakes that college student make are student loan debt and credit card debt.
Join Cathy DeWitt Dunn on Channel 5 News in Dallas to discuss College Student Money Management.
Meredith Land: The average college student now graduates with more than $37,000 in student loan debt, that’s according to a new study by the Consumer Financial Protection Bureau.
Kris Gutierrez: But student loans aren’t the only obstacle that young adults are facing. Our consumer reporter Wayne Carter is here now. And Wayne, college students and recent graduates alike have more than just their loan debt to consider, don’t they?
Wayne Carter: They sure do. And I’ll tell you, when you’re young and you’re free, you’re fresh into college, the world seems to have so many possibilities, and if you’re not careful, one of those possibilities is accruing a crazy amount of credit card debt.
Lawmakers debate about it, parents dread it. The amount of student loan debt college students are racking up is daunting. Most families will tell you, credit card debt is another big financial fiasco for college students. They don’t tend to worry as much about ordering that extra pizza or buying a new pair of jeans.
Wayne Carter: Every year, students are adding on average another grand in credit card debt.
Cathy DeWitt Dunn: Well, if you have a $10,000 limit on a credit card, you should only use 30% of that for short term debt. That lets the credit card companies understand that you know how you can live within a budget. You’re not maxing out your credit cards on a monthly basis.
Wayne Carter: Students charging to the limit are starting their credit card history with very low scores, many dealing with low bank balances, too. Upon graduation, they have credit card and student loan debt, low credit, overdrawn bank accounts, and are also trying to do the hunt for an apartment and job. Parents should talk to students about credit cards early on, make sure their children know not to use money they don’t have and use resources available to keep them on the right path.
Cathy DeWitt Dunn: Go ahead and sign up for overdraft alert or low balance alert. The fact that we have these smart phones, there’s so many ways that you could really help save yourself a lot of money by just signing up for some online apps.
Wayne Carter: Whether it’s credit card debt or student debt, paying more than the minimum balance, if possible, is going to save you a lot of interest in the long run. And some financial advisors say, having an emergency savings that equals about six months worth of how much you make should be your first priority before paying off anything extra. It’s easier said than done, but make an attempt there. Bankrate.com suggests having a 12-month saving. Whatever you decide is best for you, it’s good to have a solid safety net should anything unexpected happen.
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