Students: In Debt with No Place to Go?

Many college students labor under the hope that graduation will set them free. But according to a recent report, many students graduating this year will discover that they’ve been sent down the primrose path by way of their spending habits and optimistic attitudes about post-college job prospects. The report, published last week by Kalkin Ginsberg, a consulting company for the debt collection industry, found that the sagging economy, high debt levels and students
‘ cavalier attitudes toward credit cards could put many new graduates at financial risk.

Let’s face it, there’s nothing new about students being in debt. What is new, however, is the credit crunch. This summer more than two dozen major lenders, including Citigroup, Wachovia and Bank of America, stopped or dramatically reduced the amount of loans they give to students, according to the report. That leaves students scrambling to find other ways to pay tuition and expenses. About 23 percent of students ignore overdraft charges and the scary prospect of working years to pay off credit card debt "for a moment of fun," according to a report by the National Association of Retail Collection Attorneys that was cited in the Kaulkin Ginsberg study.

Meanwhile, 31 percent of students said they weren’t worried about high levels of credit card debt because they figure they can pay it off once they get jobs. Unfortunately for these bright young things, they’re entering a market in which guarantees seem to be slipping away, what with the collapse of Bear Stearns, the implosion of Lehman Brothers and Merrill Lynch, and the fact that the U.S. unemployment rate rose in August to its highest level in five years.

At least some students see the stark reality of what awaits them on the other side. "Especially for students in Finance, all you hear are the stories of layoffs and hiring freezes on Wall Street, so a lot of seniors are very stressed," said Ander Echanove, a senior at American University, who was quoted in the report. "With fewer jobs around, there will be a lot of competition, so that’s a big concern."

If you’re a student and you’ve already racked up enormous credit card debt, now is the time to start taking a serious look at how you spend money, and why. Don’t try to live the high life before you’ve earned it.

Tagged as: college student, debt debt collection credit card Kaulkin Ginsberg National Association of Retail Collection Attorneys unemployment Citigroup Wachovia Bank of America

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