Many college students use the “buy now, pay later” approach to credit cards and end up with a substantial amount of debt before graduating. It can take a person years to recover from the bad financial decisions made while going to college. Many college students think money gives them freedom to do what they want, but if the money is borrowed and poorly managed, it can cause big problems.

Student Loans

Student loans are a smart investment if students do well in school and pick a major that’s in demand. Federal loans are typically a good way to go. College students can use the calculators provided by to get an idea of how much debt they can manage. The website offers a very useful “how much to borrow” calculator.

In 2007-08, two-thirds of undergraduate students graduated with a bachelor’s degree and some debt. The average student loan debt for graduating seniors was $23,186. This figure does not include PLUS Loans which are taken by parents to help pay for their kid’s college education.

College Students and Consumer Debt

To help avoid debt problems, students should avoid borrowing money for to fund their partying, eating out at restaurants, expensive Spring Break vacations, video games purchases, or other entertainment expenses. Consumer debt incurred during the college years can negatively affect students’ lifestyles upon graduation. A combination of lower-than-expected salaries, higher-than-expected living expenses, and substantial student loan payments make dealing with credit card debt very difficult. Problems with credit cards, including missed or late payments, stay in a person’s credit report for seven years.

Many creditors evaluate an individual’s debt-to-income ratio to determine if they will be approved. Individuals with a significant amount of student loan debt and large monthly student loan payments may not qualify for other lines of credit, even if they have a good credit rating.

Graduate School

Many college graduates go to graduate school simply because they’re not sure what they want to do after they obtain a bachelor’s degree. Graduate school is very expensive, and graduate students miss out on work experience and income. College graduates should consider gaining experience in the working world before going into further debt by attending graduate school. By gaining work experience, they’ll learn what they want in a career, which makes it much easier to select the appropriate graduate degree program.

Sallie Mae Report

According to a report by Sallie Mae called “How Undergraduate Students Use Credit Cards“:

  • College seniors graduate with an average credit card debt of more than $4,100.
  • Many college students use credit cards to live beyond their means. Over three-quarters of college students have incurred finance charges by carrying a monthly balance.
  • Nearly one-third of undergraduates put college tuition on their credit card.
  • Just 17 percent said they regularly paid off all credit cards every month.
  • According to the survey, sixty percent of the students were surprised at how high their balance had reached.
  • 40 percent said they charged items knowing they didn’t have the money to pay the bill.
  • 84 percent of undergraduates reported they need more education regarding financial management subjects.

This report by Sallie Mae underscores the importance of using credit cards wisely.

Debt piled up during the college years can have a substantial negative impact for years. Be smart about debt!

Brian Jenkins has been writing about various career and education topics for, including college degree programs in finance, since 2008.