Today, the average college student graduates with tens of thousands of dollars in debt spread across a few different types of credit, including education loans, credit card balances and auto financing. But new data shows that in many cases, their parents’ financial behavior may shape their own.
Currently, about two-thirds of college students have at least one credit card in their own name, and of that group, about half have more than one, according to new research from East Carolina University, published in Springer’s Journal of Family and Economic Issues. Two of the major indicators of whether a young adult was more likely to have more than two credit cards were age and gender.
For instance, juniors and seniors in college were about four times more likely to have two or more accounts in their own name than freshmen and sophomores – likely attributable to the federal rules that restrict the ways in which those under the age of 21 can obtain cards in their own name, the report said. Further, women were about two times more likely than males to have multiple cards in their name, as were those who said they were comfortable only making the minimum payments on their accounts every month.
However, that proportion was also seen in consumers who reported that they’ve seen their parents argue about financial issues, the report said. Further, that group was also far more likely to have outstanding credit card balances exceeding $500.
“It is clear that the influence of parents cannot be underplayed,” the study’s authors wrote. “Researchers, educators and policymakers should work with, and include, parents in finding effective ways to increase the positive financial behaviors of college students, particularly those behaviors related to credit card use. We need to help students and parents learn financial skills and establish healthy financial attitudes at earlier ages to prevent poor financial habits from taking root.”
Student debt and other outstanding balances can significantly endanger recent college graduates’ financial standing soon after they leave school as a result of sizable bills and the soft job market for young adults. As a consequence, many may need to formulate actionable plans that will put them in a better position to handle these obligations without falling behind.
Image: MJ/TR, via Flickr