financial problem among student

Topics: Debt, Credit history, Higher education Pages: 8 (2354 words) Published: January 1, 2014
Students in Financial Crisis: How Academic Advisers Can Help

Reed T. Curtis, University of South Carolina

Editor's note: This is the eighth in a series of articles written by students enrolled in Jennifer Bloom's graduate seminar on academic advising at the University of South Carolina for the 2007 fall semester. As part of her course syllabus, Dr. Bloom required each student in her class to submit an article to The Mentor or other publications for consideration.

Introduction

Given that tuition and fees at colleges and universities are rising at a pace higher than the cost of living, students face an increasingly difficult burden of funding their educational pursuits. Since the 1980s, the cost of higher education has skyrocketed; college tuition and fees have risen by 375 percent, while the average household income rose only 127 percent (Hunt et al., 2006, p. 19). According to a 2006 United States Department of Education report, “Our higher education financing system is increasingly dysfunctional ... [as] state subsidies are declining, tuition is rising, and cost per student is increasing faster than inflation or family income” (p. 10). This report also found that state funding of education hit a new low in 2005. All of these factors have led to unprecedented levels of debt for college graduates. King and Bannon (2002) reported that 64 percent of college students graduate with debt; 39 percent of them have debt that is deemed unmanageable. King and Bannon define unmanageable student-loan debt as a debt load that exceeds 8 percent of a graduate's pre-tax yearly income. Minorities are more likely to have an unmanageable student-loan debt. Fifty-five percent of African American and 58 percent of Hispanic graduates compared to only 37 percent of Caucasians graduated with unmanageable debt (King & Bannon, 2002).

Another indicator of the extent of this problem is that 60 percent of college students move back in with their parents after graduation, helping to define a growing trend coined as “the boomerang generation” (Experience Inc., 2006). Graduates' reasons for moving home after graduation vary, but 48 percent of “boomerangers” move home because of financial problems (Experience Inc., 2006). As The Project on Student Debt (2007) explains, the “prospect of student debt can prompt students to compromise on college choice, drop out, or forego higher education altogether” (p. 13). In fact, students who lack financial security are more likely to do worse in college, drop out, or even commit suicide (Johnson, 2005). The purpose of this article is to stress that strengthening financial literacy among academic advisers is now a critical aspect of working with and empowering today's college students.

Types of Student Debt

It is also important to understand that student debt is diversified and is not simply linked to student loans alone. Students are now increasingly using credit cards to cover additional college and life expenses (Johnson, 2005). In 2004, 66 percent of all first-year students already had at least one credit card before stepping foot into their first college classroom (Nellie Mae, 2005). Even more alarming is the fact that the number of credit cards students possess increases each year throughout college, with 56 percent of seniors carrying four or more cards compared to 15 percent of first-year students with four or more (Nellie Mae, 2005). Reasons for this increased student dependence on credit cards include heavy credit-card solicitation, easy access to credit cards, increased living and school expenses, and lack of financial literacy (Johnson, 2005). Credit card companies are tireless solicitors of college students despite campus regulations and other measures of prevention (Johnson, 2005). Here are just some of the issues that relate to credit card use and abuse on college campuses: The Collection: Credit card companies participate in aggressive and emotionally abusive efforts to collect...
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