Never Mind the 'Freshman 15,' How Do You Prevent the 'Freshman $15,000'?

Half of all college students nationwide have four or more credit cards

Release Date: August 26, 2010 This content is archived.


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By graduation, the average college students owes more than $4,100 in credit card debt, says Kellie Kostek. UB has launched a financial literacy program to teach students better fiscal habits.

BUFFALO, N.Y. -- College freshmen nationwide are heading to campus armed with credit cards and ready to rack up debt. They know how to squeeze the trigger on purchases but often they don't have experience in handling the aftermath of debt. And many of them are making financial decisions for the first time.

According to a 2009 Nellie Mae (a Sallie Mae student loan company) survey:

• One-third of freshmen arrive on campus with at least one credit card

• Many have more than four credit cards

• Eight-four percent of undergraduates will eventually have at least one credit card

• By graduation they will have an average credit card debt of more than $4,100

• Almost one-fifth of graduating seniors will owe more than $7,000 on credit cards alone

To help students make better decisions, the University at Buffalo last year launched a financial literacy program managed by a former financial aid administrator. As UB's financial literacy program coordinator, Kellie Kostek's objective is to reach as many students as possible to teach the benefits of fiscal responsibility. "Most students arrive on campus having never had a serious conversation with their parents about managing debt," she says. "They just don't know where to begin."

As the new semester gets underway, Kostek's weeks are filled with financial workshops, special appearances to UB 101 orientation classes and talking to resident assistants (RAs) -- who are often the first to identify the effects of debt crisis in students.

Kostek often dedicates entire workshop sessions to the amount of money spent on coffee and fast food items alone, which can add up to more than a thousand dollars a year. She discusses better time management so that coffee can be made in the residence hall and snacks can be made or purchased more cheaply. Kostek stresses using credit cards sparingly, for emergencies only, if possible -- not for everyday impulse buys.

Kostek's other money management tips for students include:

• Don't carry around your credit cards to cut down on impulse purchases

• Don't shop when you're hungry

• Limit eating out to once a week

• Rent DVDs versus going to the movies

• Start a savings habit, pay your savings account first -- every time you get paid

• Volunteer on Campus -- always free food and great networking opportunity!

• Pay bills online or set up auto transfers to your savings account

• Look into transportation alternatives such as ride sharing, public transportation and bicycling

Kostek notes that college students are target for many credit card companies and easily fall prey to direct mail marketing credit card issuers. And because they are unsophisticated in handling a budget, are stressed for time and many are negotiating the challenges of living on their own for the first time, they're not thinking about the consequences of credit card debt.

UB, like many colleges and universities, prohibits credit card companies from soliciting on campus. Direct mail solicitations for credit cards to students on campus are not prohibited, however. And there is growing concern at UB and other schools about the ways in which all debt affects student retention.

Students who rack up enormous amounts of debt before graduation may be forced to drop out of college because they have no means of paying their student account charges (campus cash), Kostek notes. And many students who leave early have large bills and little hope for getting hired (without the degree/credential).

Kostek also points out that future employers are now investigating credit histories and credit scores as part of a background check before hiring. "Even landlords are asking for credit histories before renting apartments. It's a good indicator of how responsible a student is," she says.

Even before arriving on campus, Kostek says there is one important step parents and students should take to prevent debt burden: "Take the time to fill out the Free Application for Federal Student Aid (FAFSA), and take out a less-expensive federal student loan."

"Not only is the interest less, FAFSA also offers several flexible repayment plans that may be personalized for student needs if they are low income (field or job) or have no income (unemployed, can't find a job)," she says.

The University at Buffalo is a premier research-intensive public university, a flagship institution in the State University of New York system and its largest and most comprehensive campus. UB's more than 28,000 students pursue their academic interests through more than 300 undergraduate, graduate and professional degree programs. Founded in 1846, the University at Buffalo is a member of the Association of American Universities.

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