Student credit debt declining

Credit card debt among students is declining, according to a recent report published by Nellie Mae, a corporation that provides education financing for undergraduate and graduate students and their families.

The national average in credit card debt for college students is down 27 percent from a high of $2,748 in 2000, but the average college student still has an average of four credit cards and an outstanding balance of $2,169, according to the study.

Credit card usage had been rising steadily since 1998 when 67 percent of students reported owning a credit card. That number peaked in 2001 at 83 percent, and in Nellie Mae’s recent report that number fell to 76 percent, an 8 percent decrease.

The study also focused on the use of credit cards to pay for education expenses. While only 24 percent of respondents reported charging a portion of their tuition on credit cards, more than 70 percent said they charged textbooks and general school supplies.

“The fact that average credit card usage has declined among undergraduates in the past three years can be viewed as a sign that the message to use credit responsibly is reaching its intended audience,” said Marie O’Malley, vice president of marketing for Nellie Mae, in a press release.

But O’Malley warned that “while the sharp increases in credit card usage among college students that we have seen in recent years appear to be leveling off, undergraduate students and credit cards remain a dangerous combination.”

The Nellie Mae study, “Undergraduate Students and Credit Card in 2004: An Analysis of Usage Rates and Trends,” is the fourth in a series conducted since 1998 that hopes to identify trends of credit card use among college students.

For each of the four studies Nellie Mae extracted data from the credit bureau reports for a randomly selected group of student loan applicants. An online survey component was added for the 2004 report that was sent to 1,260 college students between the ages of 18 and 24, of which only 10 percent responded.

“The key to financial health for students during school and after graduation is being aware of what they borrow, when they borrow, and how much they borrow, and understanding the costs and responsibilities associated with all types of borrowing, including credit cards,” said O’Malley.