Credit card use in college can be worth the risk, experts say

Jayda Leder-Luis, a political science student at Northeastern University, found out about credit card debt the hard way.

“I am in my fifth year at Northeastern paying for coffee I bought when I was freshman,” Leder-Luis said to a crowd of college students at the University of Massachusetts Boston on Wednesday. “It sounds ridiculous because it is.”

Leder-Lui, along with Undersecretary of Consumer Affairs and Business Regulation Barbara Anthony and Senior Vice President of the Mass. Bankers Association David Floreen, spoke at Project Credit Smarts, a program organized by Gov. Deval Patrick’s administration aiming to
educate college students about responsible use of credit.

“What you do today has consequences that will last a long time,” said Paul Horwitz, of the FDIC, to the crowd of about 40 UMass students.

Since President Barack Obama signed the CARD Act in 2009, college credit card debt has dropped.

According to a report by Sallie Mae, the percentage of college students with credit cards dropped from 84 percent in 2009 to 40 percent in 2011. The average credit card debt held by college students dropped from $3,173 to $811 in the same time period.

Project Credit Smarts is also pressing for financial education to be taught in Massachusetts public schools.

“We have really been working hard with our state legislature on legislation that would mandate basic financial education in the K-12
curriculum in our public schools,” Horwitz said. “The message here is the misuse of any of those kind of activities, drugs, alcohol, inappropriate sexual activity and money are going to get you into trouble.”

Horwitz said that warning his son about getting a credit card eventually got in the way of benefiting from having good credit.

“He went to the other extreme. He didn’t get into any trouble but he didn’t have the opportunities that wise use of reasonable credit could
give him,” he said.

Leslie Burns, a junior studying sociology at UMass Boston, got a credit card when she was working full-time and could afford to pay it
off.  But when she came to UMass and was without a job or support from her parents, her credit card debt shot up.

“I needed this credit card to get from point A to B.  I stopped paying it – I wasn’t even making the minimum payments,” Burns said. “It took me until sophomore year to pay off the whole credit-card debt, and I had about $1600 in debt.”

Burns, who no longer has a credit card, said she still would have gotten one had she seen Project Credit Smart first.