A new study from Sallie Mae, the largest provider of student loans in the U.S., found that 30% of American students put at least some of their tuition payments onto personal credit cards. That’s an increase of six percentage points since 2004.
Perhaps equally troubling, the study found that only 18% of students are able to pay off their monthly balances (either on their own or with help from family members). More than four out of five students carried balances from month to month.
Putting tuition on credit cards and not paying off those card balances each month is not good idea. The average credit card interest rate is 14.17% nearly twice as costly as while federally consolidated student loans which are capped at 8.25%. The actual rates for most student loans are usually much less expensive-usually 7% or below.
Considering the results of Econ4U’s personal finance surveys, poor financial management on the part of college students isn’t particularly surprising. Indeed, the same Sallie Mae study found that 84% of college students feel they haven’t received adequate personal finance education.
