Preventive Medicine: Stopping the Freshman $15,000

August 30, 2010

College students often worry about how best to stave off weight gain during their first year of school, but pay little attention to something even more insidious: rapid debt accumulation.

Kellie Kostek is the University at Buffalo’s answer to the growing problem of student debt. Kostek is UB’s financial literacy program coordinator. Her objective is to reach as many students as possible to teach the benefits of fiscal responsibility.

“Most students arrive on campus having never had a serious conversation with their parents about managing debt,” said Kostek, “they just don’t know where to begin.”

Kostek’s weeks are filled with financial workshops, special appearances to UB 101 orientation classes and talking to resident assistants (RAs)—who are often the first to identify the effects of debt crisis in students.

Kostek often dedicates entire workshop sessions to the amount of money spent on coffee and fast food items, which can add up to more than a thousand dollars a year. Kostek stresses using credit cards sparingly, for emergencies only, if possible -- not for everyday impulse buys.

Kostek’s other money management tips for students include:

  • Don’t carry around your credit cards to cut down on impulse purchases
  • Don’t shop when you’re hungry
  • Limit eating out to once a week
  • Rent DVDs vs. going to the movies
  • Cut back on cable TV
  • Buy clothes that don’t need dry cleaning
  • Pay bills online or set up automatic payments
  • Look into transportation alternatives such as ride sharing, public transportation and bicycling

Kostek also points out that future employers are now investigating credit histories and credit scores as part of a background check before hiring.

“Even landlords are asking for credit histories before renting apartments. It’s a good indicator of how responsible a student is,” she says.

Kostek notes that according to a 2009 Nellie Mae (a Sallie Mae student loan company) survey:

  • One third of freshmen arrive on campus with at least one credit card
  • Many have more than four credit cards
  • Eight-four percent of undergraduates will eventually have at least one credit card
  • By graduation they will have an average credit card debt of more than $4,100
  • Almost one fifth of graduating seniors will owe more than $7,000 on credit cards alone

Students who rack up enormous amounts of debt before graduation may drop out of college to stem the tide of increasing that debt, Kostek points out. And many students most who leave early have large bills and not much hope for getting hired in a tough job market. Source: University at Buffalo