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News Release

August 17, 2005


A Smith College survey of 700 students nationwide found a quarter cover tuition, and more than half, textbooks and school supplies, with credit cards.

NORTHAMPTON, Mass.—A recent national survey of college students found 23 percent use credit cards to pay for tuition and fees, and 52 percent for textbooks and school supplies—a greater percentage than use credit cards for dining out.

Throughout a three-month period, the Smith College Women & Financial Independence (WFI) program asked about 700 undergraduate, graduate and professional school students—both male and female—about their credit card habits. Participants were selected randomly and surveyed electronically.

“Students are not just paying for late-night pizza with their credit cards, they are paying for college,” said Mahnaz Mahdavi, Smith College professor of economics, director of WFI and lead author of the study. “That can be an expensive way to get an education.”

More students in the survey had credit card debt than had student loans—65 percent compared to 48 percent. Sixty-five percent of the students with credit cards had two or more cards.

Students owed an average $2,400 on their credit cards and half of the students reported charging their cards to the limit some or most of the time. Those who used their credit cards to pay for tuition typically had higher credit card debt than those who did not. Twenty-three percent of students who paid tuition by credit card had debt greater than $5,000 compared to 11 percent of those who did not.

In addition to tuition, textbooks and school supplies, students used their credit cards to pay for the following: personal items, 58 percent; dining out, 50 percent; entertainment, 48 percent; groceries, 47 percent; and travel, 33 percent.

A lack of knowledge about financial matters played a significant role in credit card management, according to researchers. The survey assessed students’ financial knowledge based on responses to nine questions. Older students and those with higher grade-point averages tended to score higher, whereas students who were first in their families to attend college or who had lower family income scored lower. Overall, less than 1 percent of the students answered all of the questions correctly.

Fifty-five percent of students said they had never taken a course relevant to personal finance or economics. When they needed information about finances and loans, students turned first to friends and relatives, not to financial professionals or financial aid offices.

“When it comes to credit cards and personal finance in general, students lack knowledge,” said Mahdavi. “Institutions of higher education need to pay attention to the critical area of financial education.”

More women than men—72 percent to 28 percent—responded to the survey, a factor researchers said may be related to the Smith program name: Women & Financial Independence.

Researchers found that female and male students used credit cards differently. In possession of more credit cards, women were more likely than men to have credit card debt over $5,000, pay late, and not pay their balances in full.

The credit card findings are the first in a three-part financial knowledge survey of 2,700 students. Findings from the other two survey parts—financial aid/student loans, and investments—are forthcoming.

In additon to Mahdavi, Jessamyn Lewis, assistant director of WFI, and Howard Gold, associate professor of government, contributed to the study. Funded by OppenheimerFunds, Inc., the survey was administered electronically by InsightExpress.

Smith College is consistently ranked among the nation’s foremost liberal arts colleges. Enrolling 2,800 students from every state and 60 other countries, Smith is the largest undergraduate women’s college in the country.

In 2001, Smith College established Women & Financial Independence: The Smith College Program in Financial Education, to provide Smith students with the information and skills they need to deal with current and future personal finance matters.

Office of College Relations
Smith College
Garrison Hall
Northampton, Massachusetts 01063

Kristen Cole
Media Relations Director
T (413) 585-2190
F (413) 585-2174

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