A former high-achieving Halifax university student who lost a big chunk of a $50,000 Royal Bank student line of credit by investing in stocks online won’t have to pay up.
Alfredo Jeremy Abdo, 23, has been given an absolute discharge from bankruptcy, said a written decision released Wednesday by a Nova Scotia bankruptcy court.
The Royal Bank was owed $58,200 with interest, on Mr. Abdo’s line of credit, and $2,613 on a separate loan when Mr. Abdo filed for bankruptcy. The bank argued that the former Dalhousie University engineering student should have to make a substantial payment as a condition of discharge from bankruptcy.
A court hearing was held Oct. 15.
Bankruptcy court registrar Richard Cregan disagreed with the Royal Bank and dismissed its argument that Mr. Abdo had filed for bankruptcy to avoid repaying his debt to the bank.
The bank increased Mr. Abdo’s line of credit when it was clear the money wasn’t being used to fund his education, Mr. Cregan said in his decision.
"Clearly, this was not an advance for the aid of Mr. Abdo’s education, but an advance to relieve him from investment difficulty," he said.
"It may also fairly be said that, at least in part, RBC is responsible for the situation. Furthermore, it does not necessarily follow that discharging (Mr. Abdo) absolutely would be an affront to the integrity of the insolvency system."
Mr. Abdo, who had a 4.06 grade point average during his first year studying engineering, later switched to commerce. He quit university after 2½ years.
Somewhere along the line, the scholarship student, who was also athletic and active in fundraising, "did not have the emotional resources to keep it all going," the decision said.
He withdrew into a "comfort zone" and has no gainful employment. He suffers from dizziness and is living with his mother, who supports him, Mr. Cregan said.
"Having observed him, I think it is fair for me to say that he has very serious health problems, and I mean that in the widest sense, the most serious aspect of which is that he does not see that he should seek help."
Mr. Abdo was 19 and had finished his first year at university when he arranged a $20,000 line of credit with the bank. The line of credit, arranged in Aug. 31 2005, is made available to students in professional courses like law, dentistry and engineering who are expected to find well-paying jobs at graduation, said the decision.
Before the end of the year, Mr. Abdo had financial difficulty as a result of money lost on investments and called on his Royal Bank loans officer for advice.
"It appears that, along with his studies, he was seriously involved in online investing and quickly was in over his head."
To solve the problem, the loans officer offered to advance him a further $30,000 on his line of credit, the decision said.
Mr. Cregan questioned if Royal Bank’s actions were prudent.
During the course of his studies, Mr. Abdo had also received two $8,000 scholarships.
"He had a scholarship, which would have covered his tuition. It appears that his lifestyle is modest. He lived at home. I question whether advancing all that money at one time was prudent banking on the part of RBC."
Source
Monday, December 28, 2009
Tuesday, December 15, 2009
UC regents approve fee hike amid loud student protests
Amid loud student protests that roiled the UCLA campus, the UC Board of Regents this afternoon approved a 32% increase in student fees.
The fee hike of $2,500, or 32%, will come in two steps by next fall. That would bring the basic UC education fees to about $10,300, plus about another $1,000 for campus-based charges, for a total that would be about triple the UC cost a decade ago. Room, board and books can add another $16,000.
Only student regent Jesse Bernal voted against the undergraduate fees.
The noise of protesters came through the window as the regents voted. It was only lightly discussed, with UC President Mark G. Yudof urging that students explore all the financial-aid possibilities so they don’t get scared away or drop out.
Groups of UC students from several other campuses arrived in Westwood to join a demonstration against the fee hike, and a group of protesters was occupying a UCLA classroom building.
UCLA officials declared Campbell Hall, where the sit-in continued, closed for the day. Inside, about 40 to 50 students who had chained the doors shut shortly after midnight were issuing e-mail statements.
“We choose to fight back, to resist, where we find ourselves, the place where we live and work, our university,” their statement said. Campus police surrounded the classroom building, but no arrests were made.
Meanwhile, across campus, a crowd of several hundred gathered outside Covel Commons, where the regents were meeting. Students and UC employees chanted such slogans as “Whose university? Our university!”
Among them was Tommy Le, a fourth-year student at UC Santa Cruz, who left his campus at 3 a.m. today in a convoy of two buses headed south. Le, 21, an American studies major from El Monte, said he was worried about how he being able to afford the higher charges, starting with an additional $585 for the rest of the school year.
“It’s adding more stress and more burden,” said Le, who said he works two part-time jobs and sends money home to help his family. The fee increase, he said, would be “a lose-lose situation.”
Source
The fee hike of $2,500, or 32%, will come in two steps by next fall. That would bring the basic UC education fees to about $10,300, plus about another $1,000 for campus-based charges, for a total that would be about triple the UC cost a decade ago. Room, board and books can add another $16,000.
Only student regent Jesse Bernal voted against the undergraduate fees.
The noise of protesters came through the window as the regents voted. It was only lightly discussed, with UC President Mark G. Yudof urging that students explore all the financial-aid possibilities so they don’t get scared away or drop out.
Groups of UC students from several other campuses arrived in Westwood to join a demonstration against the fee hike, and a group of protesters was occupying a UCLA classroom building.
UCLA officials declared Campbell Hall, where the sit-in continued, closed for the day. Inside, about 40 to 50 students who had chained the doors shut shortly after midnight were issuing e-mail statements.
“We choose to fight back, to resist, where we find ourselves, the place where we live and work, our university,” their statement said. Campus police surrounded the classroom building, but no arrests were made.
Meanwhile, across campus, a crowd of several hundred gathered outside Covel Commons, where the regents were meeting. Students and UC employees chanted such slogans as “Whose university? Our university!”
Among them was Tommy Le, a fourth-year student at UC Santa Cruz, who left his campus at 3 a.m. today in a convoy of two buses headed south. Le, 21, an American studies major from El Monte, said he was worried about how he being able to afford the higher charges, starting with an additional $585 for the rest of the school year.
“It’s adding more stress and more burden,” said Le, who said he works two part-time jobs and sends money home to help his family. The fee increase, he said, would be “a lose-lose situation.”
Source
Sunday, November 15, 2009
Students face £4,000 debt for every extra year of study
STUDENTS in Wales are graduating with an average debt of more than £12,000, new figures showed today.
Welsh undergraduates now owe an average of £4,021 for each year of study, according to the research into students’ finances.
The breakdown of national figures also revealed that amounts owed varied drastically between students attending further education institutes in Wales, England, Scotland and Northern Ireland.
The average debt per year of study in England is £5,271, while students in Scotland and Northern Ireland owe £2,194 and £4,324 per academic year respectively.
The findings – part of the annual Push Student Debt Survey – come as A-level pupils await results that will determine whether or not they will be among the next batch of university students this autumn.
Worryingly, the report also revealed that debt is creeping up year on year, with undergraduates coming to the end of their first year of study expecting to owe £21,200 by the time they leave, compared to the £13,874 owed by those about to complete their third year of study.
Johnny Rich, editor of university information site Push.co.uk, said: “With the economy in recession, students are even more concerned about debt than they have been in recent years.
“Finding part-time work has got harder and many students are facing real financial hardship and are worrying about what lies ahead. Even so, the advantages of having a degree still vastly outweigh the costs and the Push survey shows that – with high quality advice and information – students can keep their debts down while still enjoying the benefits of university.
“These figures will give next year’s review of student funding a real headache. They beg the question whether we’ve now passed the point where students can be expected to stump up any more towards their education.”
From this autumn, tuition fees in England will rise to £3,225 and, in the coming years, students in Wales are expected to be asked to pay an additional top-up amount for every year of their course.
Lleu Williams, deputy president of Wales’ National Union of Students (NUS), said the move to introduce top-up fees could see thousands of Welsh undergraduates rack up annual debts in the region of £5,000.
He told the Western Mail: “It isn’t clear what the introduction of top-up fees in Wales will do to student debt, but it is realistic to say that it will probably equal that of students in England.”
The NUS has spent months lobbying the Assembly Government for the introduction of a national bursary scheme to help cash-strapped undergraduates. Under the proposals, the bursary would cover the cost of university life for the country’s poorest students.
“We believe that this would be the best financial option for students in Wales. It would help offset debt for those most in need,” Mr Williams said.
Under current rules, students can claim for an annual loan to cover the cost of their tuition, plus extra for books, rent and bills linked to everyday living.
However the short-term loans begin to get repaid after a graduate starts to earn a £15,000 salary.
An England-only review of tuition fees is due to commence this year, but will not be complete until after the general election.
A spokesman for the Assembly Government said that in Wales the student finance system has already been reviewed, the results of which were published in March.
He added: “All the evidence shows that those people with higher levels of education earn higher amounts throughout their lifetimes which compensates for the initial investment by the student, however, we are committed to ensuring that financial barriers do not deter potential and existing students from entering higher education.”
Source
Welsh undergraduates now owe an average of £4,021 for each year of study, according to the research into students’ finances.
The breakdown of national figures also revealed that amounts owed varied drastically between students attending further education institutes in Wales, England, Scotland and Northern Ireland.
The average debt per year of study in England is £5,271, while students in Scotland and Northern Ireland owe £2,194 and £4,324 per academic year respectively.
The findings – part of the annual Push Student Debt Survey – come as A-level pupils await results that will determine whether or not they will be among the next batch of university students this autumn.
Worryingly, the report also revealed that debt is creeping up year on year, with undergraduates coming to the end of their first year of study expecting to owe £21,200 by the time they leave, compared to the £13,874 owed by those about to complete their third year of study.
Johnny Rich, editor of university information site Push.co.uk, said: “With the economy in recession, students are even more concerned about debt than they have been in recent years.
“Finding part-time work has got harder and many students are facing real financial hardship and are worrying about what lies ahead. Even so, the advantages of having a degree still vastly outweigh the costs and the Push survey shows that – with high quality advice and information – students can keep their debts down while still enjoying the benefits of university.
“These figures will give next year’s review of student funding a real headache. They beg the question whether we’ve now passed the point where students can be expected to stump up any more towards their education.”
From this autumn, tuition fees in England will rise to £3,225 and, in the coming years, students in Wales are expected to be asked to pay an additional top-up amount for every year of their course.
Lleu Williams, deputy president of Wales’ National Union of Students (NUS), said the move to introduce top-up fees could see thousands of Welsh undergraduates rack up annual debts in the region of £5,000.
He told the Western Mail: “It isn’t clear what the introduction of top-up fees in Wales will do to student debt, but it is realistic to say that it will probably equal that of students in England.”
The NUS has spent months lobbying the Assembly Government for the introduction of a national bursary scheme to help cash-strapped undergraduates. Under the proposals, the bursary would cover the cost of university life for the country’s poorest students.
“We believe that this would be the best financial option for students in Wales. It would help offset debt for those most in need,” Mr Williams said.
Under current rules, students can claim for an annual loan to cover the cost of their tuition, plus extra for books, rent and bills linked to everyday living.
However the short-term loans begin to get repaid after a graduate starts to earn a £15,000 salary.
An England-only review of tuition fees is due to commence this year, but will not be complete until after the general election.
A spokesman for the Assembly Government said that in Wales the student finance system has already been reviewed, the results of which were published in March.
He added: “All the evidence shows that those people with higher levels of education earn higher amounts throughout their lifetimes which compensates for the initial investment by the student, however, we are committed to ensuring that financial barriers do not deter potential and existing students from entering higher education.”
Source
Wednesday, October 28, 2009
Student loans encourage culture of debt
Students are racking up crippling debts because they’re not being taught the difference between student loans and other forms of credit, a financial education charity warned this week.
Chris Tapp, director of Credit Action, said because it’s “basically impossible” to get into difficulties with student loans, students are given the message that it’s fine to be in debt.
Tapp believes students should be taught the difference between student loans and other debts such as overdrafts and credit cards to help them avoid getting into financial difficulties.
“It’s important to make a distinction between the kind of burden that you face with student debt as opposed to any other type of debt,” he said.
“I don’t think that’s been done as effectively as it could have been by the government and others.”
Two years ago, before the onset of the credit crunch, Tapp warned that student loans were fostering a culture of debt that encouraged students to “live beyond their means”.
“We now have a generation for whom you’re extremely odd if you’re not in a substantial amount of debt. It’s that culture of borrowing that student loans have really fed into,” he said.
Source
Chris Tapp, director of Credit Action, said because it’s “basically impossible” to get into difficulties with student loans, students are given the message that it’s fine to be in debt.
Tapp believes students should be taught the difference between student loans and other debts such as overdrafts and credit cards to help them avoid getting into financial difficulties.
“It’s important to make a distinction between the kind of burden that you face with student debt as opposed to any other type of debt,” he said.
“I don’t think that’s been done as effectively as it could have been by the government and others.”
Two years ago, before the onset of the credit crunch, Tapp warned that student loans were fostering a culture of debt that encouraged students to “live beyond their means”.
“We now have a generation for whom you’re extremely odd if you’re not in a substantial amount of debt. It’s that culture of borrowing that student loans have really fed into,” he said.
Source
Thursday, October 15, 2009
Life as a student: hidden costs and threat of debt
Thousands of students are finalising their university arrangements for next year following the publication of the A level results. But amid the pressure to choose the right university and the best course, it is easy to overlook the need to also find the most suitable bank account.
The unpleasant reality is that studying at university is very expensive. Students can expect to owe £23,000 by the time they graduate – the just published Push Student Debt Survey shows that undergraduates accumulate debts, on average, by more than £5,000 per year.
Yet most parents believe the cost of university is only half that amount, according to analysis by Equifax — so students may get less parental help than they hope.
The good news for students at Queen’s University or the University of Ulster is that Halifax reports that the student cost of living here is the second lowest of anywhere in the UK, while the cost of accommodation is the very lowest.
Undergraduates here can expect to spend in total £160 a week, compared to £248 in London.
And the average weekly rental here is less than £41, compared to the UK average of £77 or £95 in London.
Beware the unexpected
The National Union of Students (NUS) warns, though, of being caught out by unexpected costs. A student on a mathematical or computer science course should expect to find an additional £1,430 per year to pay for books, equipment and fieldwork. For medical students the often unexpected and unbudgeted extras cost £902.
“Universities need to be much more open about the hidden costs associated with different courses,” says Wes Streeting, the NUS president. “Many students preparing to go to university this summer may be in for a real shock.”
It is almost inevitable that students will face years of debt after they graduate because of the introduction of tuition fees.
Both Queen's University and the University of Ulster charge the maximum permitted £3,225 for tuition fees.
Those studying in Britain face similar charges.
Although tuition fees in Scotland are paid by its government, this only applies to Scottish students and those from non-UK countries in the EU.
But while tuition fees are chargeable, students may defer paying them by obtaining a student loan to cover the fees.
These become repayable after graduation when a person starts earning over £15,000 per year.
Source
The unpleasant reality is that studying at university is very expensive. Students can expect to owe £23,000 by the time they graduate – the just published Push Student Debt Survey shows that undergraduates accumulate debts, on average, by more than £5,000 per year.
Yet most parents believe the cost of university is only half that amount, according to analysis by Equifax — so students may get less parental help than they hope.
The good news for students at Queen’s University or the University of Ulster is that Halifax reports that the student cost of living here is the second lowest of anywhere in the UK, while the cost of accommodation is the very lowest.
Undergraduates here can expect to spend in total £160 a week, compared to £248 in London.
And the average weekly rental here is less than £41, compared to the UK average of £77 or £95 in London.
Beware the unexpected
The National Union of Students (NUS) warns, though, of being caught out by unexpected costs. A student on a mathematical or computer science course should expect to find an additional £1,430 per year to pay for books, equipment and fieldwork. For medical students the often unexpected and unbudgeted extras cost £902.
“Universities need to be much more open about the hidden costs associated with different courses,” says Wes Streeting, the NUS president. “Many students preparing to go to university this summer may be in for a real shock.”
It is almost inevitable that students will face years of debt after they graduate because of the introduction of tuition fees.
Both Queen's University and the University of Ulster charge the maximum permitted £3,225 for tuition fees.
Those studying in Britain face similar charges.
Although tuition fees in Scotland are paid by its government, this only applies to Scottish students and those from non-UK countries in the EU.
But while tuition fees are chargeable, students may defer paying them by obtaining a student loan to cover the fees.
These become repayable after graduation when a person starts earning over £15,000 per year.
Source
Monday, September 28, 2009
Higher education students need flexibility and support
Hidden costs and rising debts have left this year’s crop of freshers facing an unwelcome new university challenge, warns Katie Dalton, president of the National Union of Students (NUS) Wales
LAST week saw thousands of students facing potential disappointment when some universities in Wales declared themselves full, days before A-level results had been announced and before clearing had even started.
The recession and fear of unemployment has led to more A-level students than usual applying to university this September while, at the same time, people who had left education are returning to retrain as mature students, hoping to reap the long-term benefits.
Despite the fact that the number of university places in Wales is not capped as it is in England, universities still have to exercise caution. Institutions can choose to recruit beyond their funded numbers, but will receive no extra support for such students, relying only on the tuition fees paid by each individual.
If too many students are recruited on this “fees only” basis, it can lead to resources being stretched too thinly and the quality of teaching being affected. This also puts an extra burden on the government’s student support budget which provides help for students through grants and loans.
In this context, it is completely unacceptable that applicants are left in the dark about the true cost of degrees.
Last week, a survey by university information website Push revealed that the level of student debt had risen by 24% and, in some cases, reached figures of more than £20,000 a student. At the same time, an NUS/HSBC survey revealed the true cost of certain courses in higher education.
Maths and computer sciences degrees emerged as being the worst offenders in terms of hidden costs, with students spending an average of £1,430 extra to pay for books, equipment and fieldwork. Many students preparing to go to university this summer may be in for a real shock when they start to learn the true cost of higher education.
NUS Wales believes universities need to publish these hidden costs for applicants to see. There also needs to be better information, advice and guidance about student finance, including money management workshops and support in time of hardship. Information needs to be visible on university websites and prospectuses, with advice and support readily available on campus, so students do not have to get into commercial debt or jeopardise their studies by taking on too much part-time work.
Most institutions recommend that full-time students should work no more than 16 hours a week, but figures from the Institute for Employment Studies suggest that 52% of full-time students in Wales do paid work during their academic year. About 41% of these said it had a harmful effect on their studies, compared to 29% the previous year.
In the same period, 91% of full-time students and 57% of part-time students in Wales turned to commercial lenders to subsidise their studies.
Education in Wales faces two challenges. Institutions are limited in their development by a growing funding gap compared to England, which threatens the ability of Welsh institutions to compete on the global market. At the same time, they must continue to widen participation, which inevitably leads to increasing numbers of students from more diverse backgrounds.
As the cost of education and number of students continue to rise, it is essential to develop a more flexible attitude towards delivery, better support throughout courses, and assistance to students when entering the job market at the other end.
Not to do so would have a long-lasting impact not only on the economy of Wales but also on its society and culture.
In the spring, NUS Wales welcomed Education Minister Jane Hutt’s commitment to a progressive funding model, supportive of the values of social justice, transparency and public accountability.
We are working with the sector to develop a National Bursary and Scholarship Framework which will provide full-time university students in Wales with a fairer support system, easily understood and accessible nationally.
At a time when new graduates are having difficulty entering the job market, we also encouraged the Assembly Government to develop a graduate recruitment scheme – which is being finalised.
More needs to be done, however, for students from less traditional backgrounds, such as mature students, students with children, and those studying part-time. Figures from a variety of sources suggest these groups are more likely to suffer debts and ultimately drop out of their course due to lack of support.
Mature students returning to education are more likely to need support to adapt to the needs of their courses; students with children need timetables to be set early in the year to help them arrange childcare provision; and, unlike full-time students, part-time students still have to pay fees up-front and need further support to cope with the resulting financial pressures.
NUS Wales believes in a simpler, more accessible and transparent system for the distribution of student support, which can be delivered through a national bursary and scholarship framework.
We also champion a more open attitude towards the real cost of education, so potential students have access to the right amount of information and support that will help them make informed decisions about their place of study.
In a time of recession and an ever diversifying student population, higher education must be flexible and accessible to all who have the potential to succeed.
Source
LAST week saw thousands of students facing potential disappointment when some universities in Wales declared themselves full, days before A-level results had been announced and before clearing had even started.
The recession and fear of unemployment has led to more A-level students than usual applying to university this September while, at the same time, people who had left education are returning to retrain as mature students, hoping to reap the long-term benefits.
Despite the fact that the number of university places in Wales is not capped as it is in England, universities still have to exercise caution. Institutions can choose to recruit beyond their funded numbers, but will receive no extra support for such students, relying only on the tuition fees paid by each individual.
If too many students are recruited on this “fees only” basis, it can lead to resources being stretched too thinly and the quality of teaching being affected. This also puts an extra burden on the government’s student support budget which provides help for students through grants and loans.
In this context, it is completely unacceptable that applicants are left in the dark about the true cost of degrees.
Last week, a survey by university information website Push revealed that the level of student debt had risen by 24% and, in some cases, reached figures of more than £20,000 a student. At the same time, an NUS/HSBC survey revealed the true cost of certain courses in higher education.
Maths and computer sciences degrees emerged as being the worst offenders in terms of hidden costs, with students spending an average of £1,430 extra to pay for books, equipment and fieldwork. Many students preparing to go to university this summer may be in for a real shock when they start to learn the true cost of higher education.
NUS Wales believes universities need to publish these hidden costs for applicants to see. There also needs to be better information, advice and guidance about student finance, including money management workshops and support in time of hardship. Information needs to be visible on university websites and prospectuses, with advice and support readily available on campus, so students do not have to get into commercial debt or jeopardise their studies by taking on too much part-time work.
Most institutions recommend that full-time students should work no more than 16 hours a week, but figures from the Institute for Employment Studies suggest that 52% of full-time students in Wales do paid work during their academic year. About 41% of these said it had a harmful effect on their studies, compared to 29% the previous year.
In the same period, 91% of full-time students and 57% of part-time students in Wales turned to commercial lenders to subsidise their studies.
Education in Wales faces two challenges. Institutions are limited in their development by a growing funding gap compared to England, which threatens the ability of Welsh institutions to compete on the global market. At the same time, they must continue to widen participation, which inevitably leads to increasing numbers of students from more diverse backgrounds.
As the cost of education and number of students continue to rise, it is essential to develop a more flexible attitude towards delivery, better support throughout courses, and assistance to students when entering the job market at the other end.
Not to do so would have a long-lasting impact not only on the economy of Wales but also on its society and culture.
In the spring, NUS Wales welcomed Education Minister Jane Hutt’s commitment to a progressive funding model, supportive of the values of social justice, transparency and public accountability.
We are working with the sector to develop a National Bursary and Scholarship Framework which will provide full-time university students in Wales with a fairer support system, easily understood and accessible nationally.
At a time when new graduates are having difficulty entering the job market, we also encouraged the Assembly Government to develop a graduate recruitment scheme – which is being finalised.
More needs to be done, however, for students from less traditional backgrounds, such as mature students, students with children, and those studying part-time. Figures from a variety of sources suggest these groups are more likely to suffer debts and ultimately drop out of their course due to lack of support.
Mature students returning to education are more likely to need support to adapt to the needs of their courses; students with children need timetables to be set early in the year to help them arrange childcare provision; and, unlike full-time students, part-time students still have to pay fees up-front and need further support to cope with the resulting financial pressures.
NUS Wales believes in a simpler, more accessible and transparent system for the distribution of student support, which can be delivered through a national bursary and scholarship framework.
We also champion a more open attitude towards the real cost of education, so potential students have access to the right amount of information and support that will help them make informed decisions about their place of study.
In a time of recession and an ever diversifying student population, higher education must be flexible and accessible to all who have the potential to succeed.
Source
Tuesday, September 15, 2009
Back to School, but Hopefully Not Back into Credit-Card Debt
The second part of the new credit-card law is aimed at helping college kids and other younger folks stay out of debt. Banks aren't allowed to issue cards to anyone under age 21 unless the person has a co-signer or demonstrates independent means to pay bills. That part of the law won't go into effect until February. Until then, kids can get credit cards—and dig themselves into debt—pretty easily.
And college kids are quite good at this. In 2008, college seniors had an average of $4,138 in credit-card debt, and one in five seniors carried more than $7,000 in debt, per a WSJ story. That's especially bad considering the lack of job prospects once those students graduate.
Because the goal for a student should be to figure out how to use plastic responsibly and establish some credit history (because it may be difficult to rent an apartment otherwise), the WSJ offers some options other than simply letting a kid sign up for every card he wants and letting the bills fall where they may. You could make your child an authorized user, or help the kid open a checking account that comes with a debit card rather than a traditional credit card. Just make sure the debit card won't assess $30 or more in "overdraft protection" fees every time the student tries to use it and there's not enough money in the account.
A series of Consumer Reports' blog posts this week covers the world of college kids and money, including a post about credit-card debt. Among the somewhat obvious yet solid advice:
While building a good credit history is a smart move for students, the best way to do that is to shop for a credit card with no annual fee and use it to charge a recurring expense, paying off the card bill on time and in full each month.
But be wary of pre-paid cards that may be marketed to students and others with a skimpy or poor credit history because this kind of plastic is likely to only get them in more hot water.
But let's face it: College students aren't all that different than "adults." We're all equally able to spend crazily and get into debt. Everyone needs to figure out how to choose a credit card (or cards, let's face it) and use it wisely. Plenty of changes are occurring with card terms and APR rates, so it's certainly a time to reassess if the cards you have are worthwhile, and if a change is in order. Check out a NY Times story describing some of the options if you're already in debt, if you want cash back, and so on.
Source
And college kids are quite good at this. In 2008, college seniors had an average of $4,138 in credit-card debt, and one in five seniors carried more than $7,000 in debt, per a WSJ story. That's especially bad considering the lack of job prospects once those students graduate.
Because the goal for a student should be to figure out how to use plastic responsibly and establish some credit history (because it may be difficult to rent an apartment otherwise), the WSJ offers some options other than simply letting a kid sign up for every card he wants and letting the bills fall where they may. You could make your child an authorized user, or help the kid open a checking account that comes with a debit card rather than a traditional credit card. Just make sure the debit card won't assess $30 or more in "overdraft protection" fees every time the student tries to use it and there's not enough money in the account.
A series of Consumer Reports' blog posts this week covers the world of college kids and money, including a post about credit-card debt. Among the somewhat obvious yet solid advice:
While building a good credit history is a smart move for students, the best way to do that is to shop for a credit card with no annual fee and use it to charge a recurring expense, paying off the card bill on time and in full each month.
But be wary of pre-paid cards that may be marketed to students and others with a skimpy or poor credit history because this kind of plastic is likely to only get them in more hot water.
But let's face it: College students aren't all that different than "adults." We're all equally able to spend crazily and get into debt. Everyone needs to figure out how to choose a credit card (or cards, let's face it) and use it wisely. Plenty of changes are occurring with card terms and APR rates, so it's certainly a time to reassess if the cards you have are worthwhile, and if a change is in order. Check out a NY Times story describing some of the options if you're already in debt, if you want cash back, and so on.
Source
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