I came across an interesting fact while surfing the web this morning.
According to Sallie Mae, in 2008 the average student carried an average balance of $3,173 on their credit card.
Now that may or may not seem like a lot to you. Young people on their own for the first time need to pay tuition, buy books, buy food, pay their rent – oh and don’t forget about the alcohol (more on that in a minute).
I went to one of my favorite websites to calculate how much interest that would cost and how long would it take to payoff. The numbers were staggering!
I made some assumptions about these students to determine the payoff. First off, I used 9.9% as the interest rate. Not great, but remember these are college students. I also used a payment of 3% of the balance. That is higher than what would seem to be the minimum monthly payment.
Here are the facts: It will take the average college student over *600 payments to pay that card off! They are going to spend $1,204 in interest. That is almost 40% of the total balance.
Sit down before you look at the calculation of $25 as the minimum monthly payment.
OVER $34,000 IN INTEREST AND OVER *50 YEARS OF PAYMENTS!!! That means the average college student will be past the retirement age before they are able to pay off that credit card.
I know credit cards are a necessity when you a cash poor college student. Take a break from the malted hops and clear out the bong resin for just a minute and decide just how long you want to be paying for that pizza you ordered at 3 a.m.
I’m no saint, I was there, but I also knew what the affects of using a credit card were going to be and had to make an adult decision – will you make the right one? Only time will tell…
Facts on college students and drinking.
According to the Harvard School of Public Health’s College Alcohol Study – 44% of college students are classified as heavy drinkers (5 or more in a row for men, 4 or more for women).
The average college student spends $900 annually on alcohol, twice what they spend on books.
159,000 first year students will drop out before they are sophomores due to alcohol and drug related reasons.
I am curious to know what type of credit card debt those 159,000 people have and how they expect to pay it back after having just dropped out of college?
*The calculator used had a max of 50.088 years in both examples used. That means it could really take longer?!
{ 8 comments… read them below or add one }
this is really disappointing fact and we should eradicate this by creating awareness among youngsters, since they are innocent and unknown to way we should drive them more towards studies and true path.
yes if those money would be spent on their further educations then i m sure they would have achieve a great success in their life.
Here’s a question for you. As a parent of small children, if I put £1000 per year, per child, into their child trust funds, will they have enough money in the bank to get themselves a degree level education?
this is really horrible, i cannot predict who is in question, either student who are misusing it or companies who are victim of burden on them.
yeah this is very disappointing, this is not the only case with college students, but even with school students, at the very small age they get habituated of things and they just spent their whole pocket money uselessly which could be used for their further studies
Only thing to cease such things is we should spread more awareness among teenagers and make them aware about the essence and aim of life, so that they don’t get deviate to wrong path.
College and schools should also take steps to prevent the selling of such things nearby it, only then students will remain safe from that particular arena, and they won’t get trapped into bad habit.
In reply to David from weddingphotographernottingham, english university fees are just over £3000 a year and each degree lasts 3 years (post graduate degrees not included) so for a 3 year degree thats over £9000 on fees alone, don’t forget students have to pay their rent, food costs, clothes costs, and they’ll need money for entertainment (a lot in the first year!) ineviatbly your child will need to take out some kind of loan to fund all this!