Sallie Mae Study Finds Rising Number of College Students Using Credit Cards for Tuition

Data Shows Students Charge Average of $2,200 in Direct Education Expenses

RESTON, Va.--()--Despite the credit freeze, college students last year used credit cards more than ever before, including charging tuition and other direct education expenses, according to a new study from Sallie Mae, the nation’s leading saving- and paying-for-college company. The report, “How Undergraduate Students Use Credit Cards: Sallie Mae’s National Study of Usage Rates and Trends, 2009,” is the fifth in a series conducted since 1998 through the company’s affiliate Nellie Mae which analyzes the credit card use of student loan applicants.

Nearly one-third (30 percent) put tuition on their credit card, an increase from 24 percent in 2004, when the study was last conducted. In total, 92 percent of undergraduate credit cardholders charged textbooks, school supplies, or other direct education expenses, up from 85 percent in the previous study. Students who used credit cards to pay for direct education expenses estimated charging $2,200, more than double 2004’s average of $942.

“Too many students are at risk of overpaying for college by pulling out credit cards to pay for textbooks or even part of their tuition bill, instead of using less expensive financial aid to cover these items,” said Marie O’Malley, director of consumer research for Sallie Mae and author of the study. “Students and families need to build a comprehensive budget ahead of time to cover not only tuition, but also other necessities like supplies and travel costs that contribute to the overall cost of college.”

Eighty-four percent of undergraduates had at least one credit card, up from 76 percent in 2004. On average, students have 4.6 credit cards, and half of college students had four or more cards. The average (mean) balance grew to $3,173, higher than any of the previous studies. Median debt grew from 2004’s $946 to $1,645.

The higher the grade level, the more heavily students used their credit cards, with seniors graduating with an average credit card debt of more than $4,100, up from about $2,900 in 2004. The study found that freshmen carried a median debt of $939, nearly triple the $373 in 2004. Only 15 percent of freshmen had a zero credit card balance, a dramatic drop from 69 percent in the 2004 study.

Many college students seem to use credit cards to live beyond their means—not just for convenience—and more than three-quarters incurred finance charges by carrying a monthly balance.

The study found that:

  • Sixty percent experienced surprise at how high their balance had reached, and 40 percent said they have charged items knowing they did not have the money to pay the bill.
  • Only 17 percent said they regularly paid off all cards each month, and another 1 percent had parents, a spouse, or other family members paying the bill. The remaining 82 percent carried balances and thus incurred finance charges each month.

Two-thirds of survey respondents said they had frequently or sometimes discussed credit card use with their parents. The remaining one-third who had never or only rarely discussed credit cards with parents were more likely to pay for tuition with a credit card and were more likely to be surprised at their credit card balance when they received the invoice.

Eighty-four percent of undergraduates indicated they needed more education on financial management topics. In fact, 64 percent would have liked to receive information in high school and 40 percent as college freshmen.

Sallie Mae published the report to underscore the importance of educating college students about using credit effectively, weighing their spending decisions and considering their source of borrowing. To conduct the study, researchers analyzed aggregate credit bureau reports for a randomly selected group of 1,200 student loan applicants. In addition, surveys were sent to 5,800 undergraduates, of which roughly 5 percent responded. The full study is available online at

SLM Corporation (NYSE:SLM), commonly known as Sallie Mae, is the nation’s leading provider of saving- and paying-for-college programs. Through its subsidiaries, the company manages $180 billion in education loans and serves 10 million student and parent customers. Through its Upromise affiliates, the company also manages more than $17.5 billion in 529 college-savings plans, and is a major, private source of college funding contributions in America with 10 million members and more than $475 million in member rewards. Sallie Mae and its subsidiaries offer debt management services as well as business and technical products to a range of business clients, including higher education institutions, student loan guarantors and state and federal agencies. More information is available at SLM Corporation and its subsidiaries are not sponsored by or agencies of the United States of America.

Be Debt Savvy with Credit Cards: Sallie Mae’s 10 Tips for College Students

More than eight in 10 undergraduates studied in Sallie Mae’s 2009 report “How Undergraduate Students Use Credit Cards” have credit cards. Of these, nearly one-third charged tuition on their card and nine in 10 reported using plastic to pay for some type of direct education expense, such as textbooks or school supplies. College students can be savvy with credit cards and their educational expenses by following these tips:

1. Build your plan to pay for college. Plan how you will cover the full cost of attendance for your degree program. Don’t forget to include supplies, transportation, and other related expenses so at the last moment you don’t have to use your credit card.

2. Limit yourself to one low interest rate (APR) card. Use cash or a debit card for daily use.

3. Charge only what you can afford to pay in full each month. Don’t end up paying interest on pizza and iPod downloads.

4. Don't accept increases in your credit limit. Keep it modest.

5. Keep your card in a safe place where it's not easy to use for impulse purchases. Keep your number in a safe place in case your card is stolen or lost.

6. Pay the highest interest rate card first. If you already have multiple cards, pay off your highest interest rate card first, while making at least minimum payments on the others.

7. Pay your bill before it’s due. Don’t wait until the last minute and accidentally incur a late fee.

8. Keep copies of sales slips and compare them to charges on your bill. If you suspect a mistake—or worse, identity theft—contact your card issuer immediately.

9. Remember that a credit card is a convenience — not a source of spending money. Ask "Do I need it, or do I want it?" If you don't need it, don't charge it.

10. Follow the 1-2-3 approach to paying for college. First, look for financial aid that does not have to be repaid, like scholarships and grants. Second, explore low-cost federal student loans. Third, fill any gap with private education loans.


  • Education Investment Planner ( can help you estimate the total cost for your college degree and build a customized plan to pay for it.
  • Be Debt Savvy ( offers tips and tools to help you learn responsible debt management practices, starting with student loans and credit cards and lasting throughout your life.

Provided courtesy of Sallie Mae, April 13, 2009


Sallie Mae
Patricia Nash Christel, 703-984-5382
Erica Eriksdotter, 703-984-5628


Sallie Mae
Patricia Nash Christel, 703-984-5382
Erica Eriksdotter, 703-984-5628