College Kids Less Likely to Use Credit

by Laura Heffner

The economic downturn seems to have had an impact on kids who at the time were not old enough to even obtain a credit card.  Only 35% of college students obtain credit cards today as compared to 42% just two years ago.  This may be due to stricter federal regulations regarding age of the person allowed to have credit but the amount of the revolving balance has seemed to diminish as well with students being more careful about paying off the balance each month or just not holding high balances in general.

This could very well stem from watching parents and other adults struggle with the economic downturn and watching how high levels of debt whether it be a large mortgage with a variable rate or a mountain of credit card debt.  They may have been in a home that was foreclosed upon or saw a friend lose their home.  Their parent may have lost their jobs to restructuring or a plant closing and struggled with the fact that there was barely enough to go around or needing to rely on public assistance or charity.

I have tried to teach my children how debt can be almost like a prison forcing you to stay in a job you may not like because it pays more money.  Or that regardless of how great things are in the economy at that moment to plan for the down turn.  What goes up, must come down at some point.  It seems to me that everything is cyclical.  You have to prepare for the changes and live modestly.  Or at least have a good chunk of savings back that can pay your bills for six months or more.

I can remember in 2006 when my mom and I would drive the same route several times a week through a neighboring city to get her cancer treatments.  We would marvel at the large homes going up at such rapid speed.  We would remark, where are these people working?  How can they afford such houses?  We had no clue.  Being brought up poor, you put 20% down and made sure you got a fixed rate mortgage and plan for your taxes and insurance to go up each year.  In a few years, we heard news story after news story about balloon payments and adjustable rate mortgages and all sorts of strange to us financing techniques.  Then we would look at each other and nod knowingly.  So this is how they could afford a four-thousand square foot home and both work in retail.  

In a few years, we would drive by some of the same houses and see the grass overgrown, the telltale white paper posting on the front door or a front window that let one know this house had been foreclosed.  We didn't feel vindicated because we knew our jobs could easily be on the chopping block, we only felt sad to see people's dreams shattered in the name of greed.  On both sides...