Students Reach Record-High Levels of Credit Card Debt

Student Loan Girl — Wed, 15 Apr 2009 23:00:00 GMT

College students are piling up alarming amounts of credit card debt, according to a recent survey by student loan company Sallie Mae, which suggests that not only are more students relying on credit cards to pay for their rising college costs, but that more students are charging more frequently (“Average College Credit Card Debt Rises With Fees, Tuition,” April 13, 2009, USA Today).

“The message is clear,” said Edmund Mierzwinski, consumer program director for the U.S. Public Interest Research Group. “Students are carrying more debt on credit cards, and more students are paying for education on credit cards.”

Sallie Mae’s survey of 1,200 private student loan applicants found that 84 percent of undergraduate students had at least one credit card, a 76-percent increase from 2004 when the survey was last conducted. The survey also revealed that students are carrying an average $3,173 in credit card debt — the highest level seen since the data was first collected in 1998.

Financial aid experts attribute these increases, in part, to the fact that college tuition and fees have increased 439 percent over the past 25 years and that the average median family income has not kept pace, rising only 147 percent by comparison, according to the National Center for Public Policy & Higher Education (“Study: Undergrads Relying on Credit at Record Levels,” Creditcards.com, April 13, 2009).

In fact, students in the survey cited not having enough “savings or financial aid to cover all the costs” of college as their number one reason for taking out a credit card, a problem that has been exasperated by the fact that private student loan lenders have scaled back lending and tightened their credit standards due to the waning credit markets.

Because lenders have severely limited students’ access to private student loans, students have more often been charging textbooks, room and board, and schools supplies to credit cards. In 2008, students charged an average of $2,200 in educational expenses on their cards, a 134-percent increase compared to four years ago.

Once considered the “lender of last resort,” says Kalman Chany, president of Campus Consultants, a college funding advisor, credit cards are now higher up in the hierarchy of students’ college funding sources. “If (students) can’t get private loans, they turn to credit cards.”

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Congress Joins States and Colleges in Efforts to Reduce Soaring Textbook Costs

Student Loan Girl — Mon, 03 Mar 2008 07:09:00 GMT

With the average college student now shelling out between $900 and $1,000 each year for textbooks and supplies, according to the College Board’s latest Trends in College Pricing report, schools, states, and now Congress are getting involved in the crusade to control the spiraling costs of college textbooks.

Propelled by studies that show the prices of textbooks are rising faster than the rate of inflation, the House of Representatives included provisions in the recently approved College Opportunity and Affordability Act that are specifically targeted at making textbook costs more manageable, reports Elia Powers of Inside Higher Ed (“Different Tacks on Textbook Choice,” Feb. 19, 2008).

The House bill (H.R. 4137), which passed the House on February 7 and renews the Higher Education Act, would have colleges provide advance information in their course schedules about required books to give students time to plan for expenses and comparison-shop for the most cost-effective options.

Also approved by the House was an amendment (H.AMDT.951) proposed by Rep. Tim Ryan of Ohio that would create a pilot competitive grant program to assist a select number of colleges in setting up textbook rental programs.

States Enacting Their Own Textbook Legislation

H.R. 4137 would also require textbook publishers to provide more information about pricing and changes from previous editions, which follows bills already passed by some state legislatures, writes Powers.

Last April, for example, Washington state House Bill 2300 was signed into law, requiring textbook publishers to disclose retail prices and a history of revisions from edition to edition when presenting any materials to faculty.

In June, Oregon passed its similar Senate Bill 365 into law. In addition to charging publishers with providing retail prices and a list of all previous versions of a text to potential adopters, the Oregon measure requires publishers of textbook “bundles” (textbooks packaged with an accompanying CD-ROM or study guide, for instance) to make each component of the bundle available to students separately and to disclose the retail price of each piece.

In California, Assembly Bill 1548, known as the College Textbook Transparency Act, likewise calls for publishers to provide a list of revisions made to new editions, as well as for college bookstores to release the wholesale prices of textbooks. The California bill was signed by Gov. Arnold Schwarzenegger in October and goes into effect in 2010.

Changes at the College Level

In response to the increasingly vocal concerns of students, families, and legislators, not all schools are waiting on Congress or state officials to adopt changes to textbook pricing and marketing practices. Some schools, writes Powers, have already instituted book rental, buyback, or other programs in a move to extend textbook affordability.

At Rio Salado College in Arizona, for example, a partnership with Pearson Custom Publishing allows professors to “build” custom textbooks, drawing material from multiple sources. Administrators believe this program could save students up to 50 percent on reading materials.

The University of Virginia, in addition to expanding its textbook rental and guaranteed buyback programs, is increasing its selection of e-books, which can save students as much as 30 percent over print versions of new editions. And a growing number of U.Va. professors are choosing to purchase older editions of books in cases where the new material isn’t a necessity, a move the university says cuts an average of 75 percent off new book prices.

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Student Loan Blog : textbook costs

Students Reach Record-High Levels of Credit Card Debt

Congress Joins States and Colleges in Efforts to Reduce Soaring Textbook Costs