Credit Card Debt May Force More Students Into Bankruptcy

A survey conducted by student loan provider Sallie Mae shows that the average credit card balance of graduating college seniors has risen to $4,100 from $2,900 in 2004, when the last study was conducted.

Credit card debt is being used more and more by students to pay for books and other necessities as they work on their undergraduate degrees.

The survey showed that 92 percent of undergraduate credit cardholders charged textbooks, school supplies and other direct education expenses. That group charged an average of $2,200 on education-related expenses, more than double the average of $942 in the 2004 survey.

“Too many students are at risk of overpaying for college by pulling out credit cards to pay for textbooks or even part of their tuition bill, instead of using less-expensive financial aid to cover these items,” said Marie O’Malley, consumer research director for Sallie Mae.

In today’s job market where it is expected to be harder for college graduates to find a job, more students may graduate to bankruptcy if they can’t find some way to cover these debts. In some ways, this may be smarter than taking out student loans to pay for college since credit card debt can be dismissed in a Chapter 7 bankruptcy and student loans cannot.