Student Credit Card Debt Reaches Record Levels

We all know that college tuitions are spiraling out of control. And now I’m afraid there is some more bad news to add to the equation. Credit card debt for college students has now hit record levels according to Sallie Mae, the college financing company.

The average undergraduate now carries $3,173 in credit card debt. That marks the highest level of credit card debt since Sallie Mae began accumulating student credit card debt data in 1998. The last time the study was conducted was 2004 when the average debt carried by students was $2,169.

Not surprisingly the study shows that the higher the grade level of the student, the greater the debt. In 2008 college seniors graduated with an average of $4,100 of debt. That is up an astounding 41% from 2004. For their part, college freshman averaged $2,038 in credit card debt. That is a 27% increase from 2004.

And because the economy continues to deteriorate there is little doubt that 2009’s numbers will look even worse. One of the major culprits are private lenders that continue to tighten the credit supply by not giving loans. Traditionally, private companies were major players in the college financing market.

With that said there are still student loans backed by the federal government readily available. In addition to that, there are grass roots movements aimed at lowering interest rates for student loans even further and even some calls for forgiving college debts altogether (student loans that is, not student credit cards).

Of course, it is all just talk at this point and if you currently hold any student loans I wouldn’t get too excited just yet.

So basically where we stand is our young men and women trying to get an education but having a hard time financing it and in turn, are turning to the lender of last resort, which are credit cards. It is a dangerous brew indeed.

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