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Study finds rising student credit debt

Credit card debt among undergraduate college students is a common phenomenon -- and may be on the rise, according to a recent study.

The study, conducted by Nellie May Corp., found that the median credit card debt among undergraduate students in 1999 is $1,283, a slight increase from $1,222 in 1998.

The median credit card debt among graduate students, however, is slightly down, from $2,834 in 1998 to $2,678 in 1999.

The data showed that 60 percent of undergraduate students are credit card holders and that percentage rises to 96 percent for graduate students.

Carolyn Shanley, a spokeswoman for the Massachusetts-based Nellie Mae Corporation, called the study "a red flag" for college students.

Many factors lead to student debt, including increases in college tuition and a rise in the number of students without jobs living off campus while still incurring student loans, Shanley said.

Credit cards also have become more available to students over the years, a factor that adds to high student debt rates.

Credit card companies often solicit students by phone, mail and in person, offering free gifts if students sign up for a credit application. Such practices entice students to sign up for a card and can lead to misuse of credit if a student is not careful, Shanley said.

"It could turn out to be one expensive [free] t-shirt," she said.

But misuse of credit is not a prevalent problem at the University Bookstore, Bookstore Director Jon Kates said.

"We have never had any problems collecting from credit cards," Kates said.

Two credit card companies, American Express and the U.Va Credit Union, are endorsed by the Bookstore, Kates said.

For many students, an alternative to credit cards is Student Charge, a program that sends a student's bill home to his or her parents, and is available at the University and other schools. The program is run interest free and establishes a set credit limit, Kates said.

It "really has been a blessing" because quick steps can be taken when a student begins to get into to debt by contacting the parents or cutting off use of the program, he said.

Despite the study's findings, credit cards can be useful tools as long as students "budget wisely" --keeping track of what one borrows and how much one spends, Shanley said.

But if a student should find himself or herself in financial trouble, they should contact the loan officer or credit card company to work out a solution, she said.

"The worst thing [a student] can do is default" on payments, she added.

The study consists of data from private loan applications submitted to Nellie Mae by graduate and undergraduate students.

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