More than half of college students have a checking account and nearly a quarter have multiple credit cards. But do they know how to use them?
College students need more than Credit 101 — they need schools with holistic ﬁnancial literacy programs.
That’s the message of a new study by EverFi. It says reactionary help, such as default management or loan exit counseling, isn’t as good as teaching students money management all along.
“A freshman in college may beneﬁt most from education around school loans, budgeting while in school, and credit card behavior, whereas seniors in college may beneﬁt more from education around budgeting for life on their own, retirement planning, and mortgages,” the study says.
The group surveyed 40,000 college students (almost all freshmen) from across the country about banking, savings, credit cards, and school loans. It found that:
- 28 percent have a credit card, and nearly 25 percent have more than one.
- 24 percent of students with credit cards had more than $1,000 in credit card debt, while just over 5 percent had more than $5,000.
- 35 percent reported typically making only minimum payments, and 7.5 percent have been late on payments at least once in the past year.
- 86 percent have access to a checking account, although only 58 percent have a personal checking account.
- 79 percent worry frequently about debt, but a majority of students agreed with the ideas that it’s OK to have an overdraft fee if you know you can afford to pay it, and that it’s nice to own things that impress people. Nearly a third agreed it was better to have something now and pay for it later.
Students usually enter college with risky debt behavior, the study says, and it’s everybody’s job at the school to fix it. “Addressing student ﬁnancial problems should be the responsibility of the entire institution — students, faculty, student affairs, and ﬁnancial aid,” it says.
Financial education shouldn’t stop at graduation, either. In the video below, we have five tips to help new grads build credit.