Students struggling to budget for college years - Debt Consolidation the answer?

The average undergraduate has $2,200 in credit card debt, according to Nellie Mae, the nation's largest maker of student loans. That figure jumps to $5,800 for graduate students. Since so many student credit cards have high annual percentage rates, the longer these students wait to pay the cards off, the worse it gets.

If they just pay the minimum payments it would take a student more than 12 years and $1,115 in interest to pay off a $1,000 balance on a credit card with an 18 percent annual rate. Interest rates increase if students fall behind on the debt, which in turn makes it more unlikely that the student can repay their debt.

It is easy for college student to get caught in the credit card trap. Most college students have credit cards. Creditors set up booths on college campuses to lure students in to fill out applications and most of these card the interest is over 18%.College Students should get themselves a secured card first. With a secured card, they will have to deposit money into the account and then you can charge only what you have deposited into the account. Once you’ve shown you are responsible with a secured card, you can move onto a regular credit card.

Another thing students can do is pay off the balances on the credit card in full at the end of the month. This is a good way to establish and build credit. This will also show the creditors that you are not spending beyond your means and can handle repayment obligations.

Sallie Mae's research suggests more students are paying for educational expenses such as books and school supplies with credit cards. And they're doing so more often. Many of these students don’t know where to turn to for financial help and maybe reaching out to them with financial literacy and budgeting ideas, they will start using credit cards wisely.


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