college debt

Are You Dumb or Just Plain Arrogant?

NEW YORK - Graduate students seem to be pulling out their credit cards more often to pay for school expenses - a trend that worries financial experts.

A study released Wednesday by Nellie Mae, a company based in Braintree, Mass., that provides education financing for college students, found that more than nine in 10 graduate students had at least one credit card in the 2006-07 academic year. Their average outstanding balance was $8,612, up 10 percent from the $7,831 average balance when the study last was done in 2003.

While most say they try to make at least the minimum payment every month, just 20 percent pay off their cards in full, so student's balances continue to grow.

One reason graduate students carry a lot of debt is that they've been building on the $3,500 in card debt they carried when they completed their undergraduate studies, said Marie O'Malley, a spokeswoman for Nellie Mae, which is a division of the SLM Corp., also known as Sallie Mae. And graduate students typically are eligible for fewer grants and scholarships than undergraduates, making them more dependent on their own financing.

More than 94 percent of the students used their credit cards for school-related expenses, especially the purchase of textbooks, school supplies and transportation. Nearly one-third used their cards for tuition costs, and more than one-third used them to cover college fees.

"We know there are more cost-effective ways to pay for college," O'Malley said, noting that most student loans carry lower rates and better repayment terms than credit cards. She added that it was unclear if graduate students were unaware of alternatives or didn't take the time to hunt them down.

Business students carried the highest average debt at nearly $14,000 followed by law students, and medical or dental students. NEW YORK - Graduate students seem to be pulling out their credit cards more often to pay for school expenses - a trend that worries fi... more

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