Credit card debt has long been a problem for America’s youth - even before the recession began, students were using credit cards to help pay their college costs. Unfortunately, as tuition and fees rise and the economy suffers, more students than ever are putting their college bills on plastic.

Debt on the Rise

For over a decade, college loan company Sallie Mae has been studying student debt, periodically surveying students to discover what debt looks like for the everyday student.

Sadly, their latest report shows that the typical student debt has risen by over $1,000 since 2004! According to their most recent survey, the average student now holds $3,173 in credit card debt.

Still more worrisome is the trend of longevity and debt: the longer a student has been in college, the higher his or her credit card debt tends to be. Fourth-year students, for example, have an average debt of $4,138 (and that number is up 44% from senior-year debt in 2004!).

Credit Card Alternatives

Now more than ever our children need to understand the importance of mitigating debt and building a good credit score (our sister site, Surviving College Life, has an article targeted to teens & students about what a credit score is.)

Thankfully, your child has several alternatives when it comes to paying for his or her portion of college. Applying for grants and scholarships can be a great use of summer vacation time (see my tips here!). Students should also consider work-study if it is available, paid internships, or a regular part-time job.

If scholarships and earned income aren’t cutting it, your student should consider borrowing federal student loans. Last year congress raised the annual amount students can borrow each year by $2,000. With lower interest rates and better consumer protections than private student loans or credit cards, federal loans are a good option for students who need to borrow to pay for college. (See my large collection of articles about student loans for more information!)

All the best,
Deborah Fox

photo by woodsy