Living with credit

College students handling credit well

Kelly Dilworth

When it comes to using credit cards responsibly, today’s college students are surprisingly good at handling high-interest credit, according to a new Ohio State University study. The trend toward responsible credit use might not last for long, however. Additional research released this year shows that younger college students aren’t nearly as responsible.

The Ohio State study surveyed more than 18,000 college students across 52 institutions and found that credit card usage is still alive and well on college campuses, despite federal rules limiting student access. The study found that most college students — more than 56 percent — still carry at least one card even though the Credit CARD Act of 2009 sharply limited underage students’ ability to qualify. (To get a card, students under the age of 21 either have to show proof of independent income or convince a co-signer to sign off on their application and be responsible for the debt.)

Today's college students pretty good with credit

Despite widespread concerns that students are too young to properly manage credit, most student cardholders aren’t maxing out their credit limits or using their cards to go on wild shopping sprees. Instead, “many students use credit cards as a source of funding for their education or for paying for day-to-day expenses,” write study authors Anne McDaniel, Catherine P. Montalto, Bryan Ashton, Kirstan Duckett and Alicia Croft in the report.

Instead of borrowing more than they can afford to repay, the study found most student cardholders are conservative about how much they charge each month. For example, more than 55 percent carry a balance of less than $1,000. Only 8.3 percent carry a balance totaling more than $3,000.

Meanwhile, nearly half of student cardholders — 47.2 percent — say they avoid interest charges by repaying their balances in full each month. That’s about on par with all credit card holders.

Just over 30 percent of student cardholders say they pay more than the monthly minimum, and only 12.1 percent pay just the minimum amount due.

Students aren’t carrying wallets stuffed with plastic, either. Around 45 percent only carry one or two cards at the most — again, closely matching the overall adult population. A little more than 5 percent carry three credit cards, while just over 7 percent carry four or more cards.

The results of the study are encouraging, especially since so many college students are also contending with high levels of student debt. According to the Ohio State study, 64 percent of students carry some type of student loan and more than 20 percent think they’ll owe more than $50,000 by the time they graduate.

However, additional research carried out this year also found that students’ financial management may be taking a turn for the worse. An April 2015 study by the education technology company EverFi found that 58 percent of first-year college students feel unprepared to make important financial decisions, and a growing number admit to making poor money choices.

For example, the percentage of first-year students intending to pay their credit card bills on time has declined steadily since 2012, the study of approximately 42,000 freshmen found. Students just starting out were also less likely to follow a budget, pay their bills in full or save at least 5 to 10 percent of their income.

Even more troubling, students’ attitudes toward money worsened the older they got, the study found. “Consistent with findings from previous years, financial attitudes displayed more materialism, more compulsion, less caution and less aversion to debt as time spent on campus increased,” wrote EverFi in the report.

A long-term trend?
It’s not exactly clear what’s driving students’ worsening financial attitudes. But I’d be willing to bet that the improving economy might have something to do with it. As wages increase and the job market continues to recover, the next generation of college students will likely be much less worried about their money and their job prospects.

That’s good news for college students’ mental health. Anxiety amongst college students has escalated in recent years. According to Penn State’s Center for Collegiate Mental Health, it’s now the single most common reason college students seek mental health treatment.

But it could also mean that the responsible financial behaviors we’re seeing now amongst most college students may start to disappear as the economy improves and the future looks less scary.

Join the Discussion

We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, we ask that you do not disclose confidential or personal information such as your bank account numbers, social security numbers, etc. Keep in mind that anything you post may be disclosed, published, transmitted or reused.

The editorial content on is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company's business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.