For Immediate Release
Demos Statement on Sallie Mae Report Showing Skyrocketing Student Credit Card Debt
"A Shocking Increase of More than 44 % in 4 years For College Seniors; Congress Must Act To Protect Student Borrowers, Reform Higher Ed Funding"
NEW YORK - This week, Sallie Mae
published a new report showing a massive increase in credit card debt among
college students over the last four years. The study, entitled "How
Undergraduate Students Use Credit Cards: Sallie Mae's National Study of Usage
Rates and Trends, 2009" showed that, as educational expenses and costs of living
rose while student aid continued to drop, more students relied on their credit
cards to pay for college expenses.
In response, Tamara Draut, Vice President of Policy and Programs
at Demos, a national research and policy center which studies the economic
concerns of young adults and the rise of debt in America, and author of the book
"Strapped: Why America's 20-and 30-Something's Can't Get Ahead," issued the
"The report published this week by Sallie Mae, the nation's
largest student loan provider, captures a disturbing rise in credit card debt,
much of it fueled by the rising cost of college and an anemic financial aid
system that can't keep up.
"This study reveals a large increase in the level of student
credit card debt since 2004, with the average indebted senior now carrying over
$4,100, a 44 percent increase, while the average freshman in 2008 had
accumulated over $2,000 debt. In a 'Debt for Diploma' system that already
saddles college graduates with over $20,000 in student loan debt, the evidence
of increased credit card debt further confirms that college costs are leaving
this generation with a heavy debt burden.
"The reasons for this massive debt increase are manifold:
Adjusted for inflation, college tuition at the average 4-year institution has
increased 35% in the last five years alone. The Sallie Mae report reveals that
more students are using their credit cards to cover the direct costs of college.
In fact, 30 percent put tuition on their credit card, up from 24 percent in
2004, and 92 percent of undergraduates with credit cards charged textbooks,
supplies, and other expenses, up from 85 percent in 2004. And the average
charges related to direct college costs more than doubled from 2004 to 2008,
from $942 to $2,200.
"Fortunately, there is currently Federal momentum to enact
crucial credit card industry reform as well as modernization and expansion of
federal student aid programs
"These include The Credit Card Accountability, Responsibility
and Disclosure Act, or 'the Credit CARD Act', introduced by Senator Dodd (D-CT)
last month and the Credit Cardholder's Bill of Rights Act, introduced by Rep.
Carolyn Maloney (D-NY), which would put an end to some of the most abusive
practices of the credit industry, including aggressive marketing of credit cards
to the young. The Sallie Mae report underscores the need for such reform, and
for increasing scrutiny of predatory and capricious credit card practices.
"We also have in the President's budget a foundation for many of
the key reforms needed to ensure greater access to funding for higher education
and making loans more affordable over the long term, such as moving to a Direct
Loan program and expanding grant-based aid.
"These are currently under consideration by Congress, and
deserve serious attention.
For more information about Demos' work on young adult
financial concerns, including "Strapped" (http://www.strappedthebook.
"Economic State of Young America" (http://www.demos.org/pubs/
the "Contract for College," (http://www.demos.org/pubs/
Draut, see contact information.
A multi-issue national organization, Demos combines research, policy development, and advocacy to influence public debates and catalyze change. We publish books, reports, and briefing papers that illuminate critical problems and advance innovative solutions; work at both the national and state level with advocates and policymakers to promote reforms; help to build the capacity and skills of key progressive constituencies; project our values into the media by promoting Demos Fellows and staff in print, broadcast, and Internet venues; and host public events that showcase new ideas and leading progressive voices.