Credit card debt on college campuses: causes, consequences, and solutions

College Student Journal, Sept, 2002 by Jill M. Norvilitis, Phillip Santa Maria

A similar pattern has been found with drug and alcohol education programs. Programs that simply provide information to scare students away from drugs and alcohol are not effective. One popular example of such a program is DARE, an information-based program. Found in many cities across the nation, DARE has not been found to effectively reduce drug use or positive drug attitudes (Lynam et al., 1999). On the other hand, programs that provide students with skills to combat peer pressure and solve problems, such as the program Life Skills Training, are effective. Life Skills Training has been found to lower levels of alcohol, tobacco, and drugs by over 50 percent through teaching skills to resist drugs and enhance self-management and social skills (Scattergood, Dash, Epstein, & Adler, 1998).

Although sexual activity, drug and alcohol use, and credit card debt appear far apart, the same guiding principles are currently used in education about sex and about drugs. At present, it appears that there is no standard for educating students about money. According to the National Institute for Consumer Education (NICE; 1996), more than half of states have a policy about consumer education in the schools. However, great variability exists in the requirements and in programs offered.

A search of available programs located a range that varied from videos and handouts to comprehensive multi-session presentations with instructor's manuals, workbooks, and structured activities. Unfortunately, very little outcome research has been done on most programs. For example, the Master Your Future program from MasterCard, touted as being "award-winning," has not been systematically evaluated. The National Endowment for Financial Education's High School Financial Planning Program has had limited research. At a three-month follow-up, student knowledge had increased as well as personal savings rates (Boyce & Danes, 1998). Credit card debt was not specifically targeted and long-term follow up has not been completed.

Thus, the present state of consumer education programs leaves much to be desired from the perspective of reducing college student credit card debt. Some programs appear heavily focused on providing information, rather than skills, and may not be likely to effect change. Other programs appear promising and follow many of the principles that guide effective sexuality and alcohol education programs. However, until experimental studies support their effectiveness, it will remain unclear whether or not these studies help our college students.

Nonetheless, it is important to educate students about credit cards. Students need to know basic guidelines for eliminating and staying out of debt such as knowing credit card balances and interest rates, knowing that transferring high-interest rate balances to lower rate cards provides instant savings (if the high rate cards are immediately cut up), and that debit cards and checks allow students to only spend what they actually have.

Colleges should be encouraged to develop their own programs or modify existing high school programs to increase awareness and financial skills. A logical place for such a program would be in conjunction with new student orientation, although programming should be offered throughout the year and for all students. Clearly, program effectiveness studies would need to be completed. In addition, many organizations, ranging from Visa, MasterCard and American Express to the Federal Trade Commission, offer free educational pamphlets on credit cards. Such pamphlets should be available to students in many locations across campus together with information about non-profit credit counseling services.