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September 2008

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CPAs Can Educate College Students on Responsible Credit Card Use

The growing credit crisis in the United States may be centered on homeowners and lenders, but in tough financial times, no group can afford to be financially illiterate. Although most college students do not hold a mortgage, many possess significant debt in the form of student loans and credit cards. Nellie Mae Corporation, a major provider of student loans, has conducted several studies on student credit card debt. A 2005 study found that one-third of undergraduate students had a credit card balance in excess of $2,000 (“Undergraduate Students and Credit Cards in 2004: An Analysis of Usage Rates and Trends,” www.nel-liemae.com/pdf/ccstudy_2005.pdf). A 2006 study of graduate students found that credit card debt continued to grow throughout graduate school. Between the first and fourth years of graduate school, average credit card balances increased by 77% (“Graduate Students and Credit Cards—Fall 2006: An Analysis of Usage Rates and Trends,” www.nelliemae.com/pdf/ccstudy_2006.pdf). Although college students are highly solicited by credit card companies, many are not adequately educated on the responsible use of credit cards. For a list of useful websites promoting financial literacy, see the Exhibit.

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