katie sam uw-stout senior credit and debt management among college students: practices and...
TRANSCRIPT
Katie Sam
UW-StoutSenior
CREDIT AND DEBT MANAGEMENT
AMONG COLLEGE STUDENTS:
PRACTICES AND IMPLICATIONS
Credit – Ability of a customer to obtain goods and services before payment
Debt – State of owing money
If you use credit, you accumulate debt
CREDIT AND DEBT
Easier for Average American to: Invest in the MarketManage Own Stock/Mutual Fund InvestmentsSet Up Various Savings Tools
More Young Adults Have Access to Credit to:Pay for EducationMake Ends MeetMake Major Life Purchases
OPPORTUNITY FOR GREAT REWARDS
Benefits:Control Their FinancesAchieve Their DreamsBenefit from Investments
OPPORTUNITY FOR GREAT REWARDS
Dependent on:Their Ability to
Make Self-Beneficial Financial Decisions
Ability to Understand How Money Works:Earn, Manage, Invest, & Donate It
Financial Literacy Self-Beneficial Behaviors
College Graduates are Financially LiterateOnly 34% of Americans Graduate
Financial Literacy is Declining (Mandell)
1997 2000 2002 2008 57.3% 51.9% 50.2% 48.3%
FINANCIAL LITERACY
STUDENT LOAN DEBT
The 70% of 2012 Graduates with Student Loan Debt Averaged $29,400 (Reed
& Cochrane, 2013).
(Louis, 2013).
70% Increase in College Freshman with Cards
Median Debt at Every Grade Growing
CREDIT CARDSSALLIE MAE, 2009
Rising Cost of Education1981: $8,4382011: $19,339
Diffi cult to Work Full-Time
Debt is not always Bad
DEBT MAY BE NECESSARY
Use Credit to Live Beyond Your Means40% Respondents Charged Item Knowing They Didn’t have the Money to Pay (Sallie Mae, 2009)
Accumulating Debts Aren’t Paid OffFailure to Recognize Costs Associated
with Borrowing Money
BAD DEBT PRACTICES
What Students Know What They Don’t Know
Credit Limit Late Fee Payments
Current Balance Overbalance Fees
Interest Rates
No Cards
1 Card
2+ Cards
$0
Under $5,000
Under $10,000
Over $20,000
0% 20% 40% 60% 80% 100%
Freshman
Senior
SENIORS HOLD MORE DEBT/CARDSTo
tal
Deb
t#
C
ard
s
Correct Response RatesWhat Does a Credit Score
Measure? 44.64%
When Can You Check Your Credit Report? 75.89%
Who Has Access To Your Credit Report? 58.93%
What are the Three Major Credit Reporting Bureaus? 34.82%
Average 53.57%
FINANCIALLY ILLITERATE STUDENTS
Pinto & Mansfield, 2006
DOUBLE JEOPARDY:
HIGHER OUTSTANDING
CREDIT BALANCES ARE ASSOCIATED
WITH HIGH STUDENT LOAN
DEBT
Two +
Loans
Student Loans
No Loan
s
What Does a Credit Score Measure?
40% 47% 45%
When Can You Check Your Credit Report?
96% 73% 76%
Who Has Access To Your Credit Report?
80% 53% 66%
What are the Three Major Credit Reporting
Bureaus?67% 19% 55%
Average 71% 48% 60.5%
CREDIT KNOWLEDGE BY LOAN
13% Believe Debt is not Manageable
12% Admitted Using Cards to Live Above Their Means
20% Admitted to Making a Purchase Knowing They Didn’t Have Money
RED FLAGS
Accumulate More Debt
Harder to:Pay off Debt QuicklySave Early for Major Purchases & RetirementAccumulate Assets
Impede Ability/Desire to take out Small Business Loans
LONG TERM CONSEQUENCES