Grad Students Use Credit for School

NEW YORK - Graduate students seem to be pulling out their credit cards more often to pay for school expenses - a trend that worries financial experts. A study released Wednesday by Nellie Mae, a company based in Braintree, Mass., that provides education financing for college students, found that more than nine in 10 graduate students had at least one credit card in the 2006-07 academic year.

Their average outstanding balance was $8,612, up 10 percent from the $7,831 average balance when the study last was done in 2003. While most say they try to make at least the minimum payment every month, just 20 percent pay off their cards in full, so students’ balances continue to grow.

More than 94 percent of the students used their credit cards for school-related expenses, especially the purchase of textbooks, school supplies and transportation. Nearly one-third used their cards for tuition costs, and more than one-third used them to cover college fees. “We know there are more cost-effective ways to pay for college,” O’Malley said, noting that most student loans carry lower rates and better repayment terms than credit cards.

Bucci, who is with the Money Management International credit counseling agency and author of the “Credit Repair Kit for Dummies” book, worries that even smart graduate students may not understand the implications of carrying too much debt or of mishandling it. “While they’re in school, they don’t pay a lot of attention to the monetary costs, the interest costs of credit,” he said. So they add credit card debt on top of their undergraduate and graduate student loans.

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