Nellie Mae Study Points to Need for Credit Education among Graduate and
Professional Students
BRAINTREE, Mass., Sept. 6 /PRNewswire/ -- While the average credit card
usage and debt levels among graduate students have remained stable since
2003, older graduate students carry nearly twice as much credit card debt
as their younger counterparts, and just 20 percent of all respondents
report paying off their monthly credit card bills in full each month.
(Logo: http://www.newscom.com/cgi-bin/prnh/20030617/SLMLOGO-a )
Those results are part of a new study released by Nellie Mae, a top
national originator of federal and private education loans, and a
recognized leader in debt education and financial management for students.
The study, "Graduate Students and Credit Cards in 2006: An Analysis of
Usage Rates and Trends," is available at http://www.nelliemae.com .
The percentage of graduate-level students who have at least one credit
card decreased only slightly in the past three years (from 96 percent to 92
percent), and the average outstanding balance on credit cards held by
graduate students increased 10 percent since 2003 (from $7,831 to $8,612),
an increase on par with standard cost of living increases.
"By and large, these are savvy students who have undoubtedly weighed
the benefits and costs associated with a graduate education and have
elected to attain an advanced degree to better themselves and increase
their earning potential," said Marie O'Malley, spokeswoman, Nellie Mae.
"However, their responses and behaviors indicate that many of them still
need information on reducing credit card debt, financing graduate school,
and managing money."
This study is Nellie Mae's sixth in a series conducted since 1998, the
fourth to include graduate student data, and the second to focus
exclusively on graduate students. The first study was prompted by concern
that students were taking on more credit card debt than necessary and
overlooking college financing options which offer better rates, benefits,
and repayment options. The most recent findings include:
Credit Card Usage
-- In 2006, 92 percent of graduate students have at least one credit card,
a 4-percent decrease from the 96 percent who had credit cards in 2003.
The average outstanding balance on graduate student credit cards
increased 10 percent during that time, from $7,831 to $8,612.
-- Ninety-four percent of graduate student survey respondents used credit
cards to pay for some portion of their direct education expenses,
primarily textbooks. Twenty-eight percent admitted paying for some
portion of their tuition with credit cards.
-- The majority of graduate students, 67 percent, said they took out their
first card as an undergraduate.
-- Of the graduate student survey respondents, 93 percent would have liked
more information on financial management topics before they started
school and would like financial management education now.
Credit Card Debt Levels
-- The more time spent in graduate school, the more likely a student is to
grow his or her credit card debt level. On average, older graduate
students (aged 30-59) carry $12,593 in credit card debt, almost twice
as much as their younger counterparts (aged 22-29) who carry an average
debt of $6,479.
-- Eleven percent of first-year graduate students do not have credit
cards, while only 4 percent of fourth-year graduate students do not
have credit cards.
-- As has been true in previous studies, students attending school in the
Midwest region of the country tend to carry the highest credit card
debt.
-- Although 93 percent of respondents try to keep their credit card debt
under control by paying at least the required monthly minimum, just 20
percent said they pay off their cards in full each month.
"The upward trajectory of credit card debt levels as these students
remain in graduate school demonstrates the need for better planning and
budgeting before graduate school begins and as underclassmen," said
O'Malley. "Ideally, this group should have ongoing access to financial
management education and tools, and receive counseling about their
financial aid options each semester."
The study also revealed that the average amount of money put on credit
cards for all direct education costs (tuition, room and board, textbooks,
school supplies, transportation) was $2,820, with 10 percent of the group
charging $7,000 or more. Only 6 percent of respondents did not use credit
cards at all for a direct education expense. The most common direct expense
for which graduate students used their credit cards was textbooks, with 83
percent indicating they had charged some portion of their textbook costs.
"With the creation in February 2006 of the Graduate PLUS loan--which
allows graduate and professional students to borrow up to the cost of
attendance for all direct education expense, less any aid received--we can
most likely expect to see more students opt for this low-cost federal loan
over credit cards," said O'Malley.
Of the 28 percent who said they used credit cards for some portion of
their tuition, the average balance estimated was higher at $5,416, with 26
percent of this sub-group charging at least $7,000. O'Malley warns that
such usage is disconcerting given that variable interest rates on credit
cards average more than 14 percent (Source: Bankrate.com, July 2007).
"Student loans are a much wiser financing choice for qualified education
expenses than credit cards, because they offer built-in deferment options,
low (often subsidized) interest rates, and financial incentives for making
on-time payments," she said.
To view the study in its entirety, visit http://www.nelliemae.com .
Since 1982, Nellie Mae has focused exclusively on providing education
financing for undergraduate and graduate students and families, through
Federal Stafford, PLUS, and Consolidation Loans, as well as its suite of
private EXCEL Loans. Online services include loan applications with e-
signature, a loan information center, and Nellie Mae's Financial
Success(SM) series to help students be brilliant before, during, and after
college. Located in Braintree, Mass., Nellie Mae is a wholly-owned
subsidiary of SLM Corporation (NYSE: SLM), commonly known as Sallie Mae.
Sallie Mae is the nation's leading provider of saving- and
paying-for-college programs. The company manages $153 billion in education
loans and serves nearly 10 million student and parent customers. More
information is available at http://www.salliemae.com . SLM Corporation and
its subsidiaries are not sponsored by or agencies of the United States of
America. Nellie Mae: Celebrating 25 years of delivering student loans
brilliantly.
SOURCE Nellie Mae
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Related links:
http://www.nelliemae.com
http://www.salliemae.com/
Photo Notes:
NewsCom: http://www.newscom.com/cgi-bin/prnh/20030617/SLMLOGO-a
AP Archive: http://photoarchive.ap.org PRN Photo Desk
photodesk@prnewswire.com
CONTACT:
Beth Guerard of Sallie Mae, for Nellie Mae,
+1-703-984-5621, beth.guerard@salliemae.com
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