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College students view debt as normal
WASHINGTON (8/29/08)--Nearly one-fourth of college students surveyed recently don't consider long-term ramifications when they use a credit card. Instead they will go into debt for months, simply to enjoy the moment, according to a new study. However, despite the "bad behavior," the students said they knew they must act responsibly or risk ruining their financial future. The survey underlines the importance of financial literacy programs. Credit unions involved in financial education need to educate students before they develop those bad habits. The online poll of 500 college students was sponsored by the National Association of Retail Collection Attorneys (NARCA). In its report released earlier this week, NARCA said the study revealed "alarming data" indicating that many young people aren't concerned about debt (PRNewswire Aug. 25). "Our poll suggests that too many young people are living for the moment and are not preparing for their financial future," said Robert Markoff, NARCA president. "Having good credit probably has more impact on your life than having a minor criminal record," Markoff said. "The type of impulsive behavior our data demonstrated can have significant and lasting effects on students' lives." Key findings:
* More than 25% of students polled said it is reasonable to run up a debt to splurge on a special celebration with friends at a restaurant or to use a credit card as a way to "raise cash." * Roughly 31% of the students said they do not worry about debt, because they can pay it back after they are out of school and earning a regular paycheck; * An average of 23% chooses to ignore overdraft penalties and the prospect of months or years of paying off a debt incurred for a moment of fun. * 92% agree that bad debt will significantly impact a person's ability to get credit in the future. Bad debt was defined as failure to pay bills for so long that a debt collector must contact the customer. * 46% said they always keep records of their spending and receipts. * 42% of those who had been contacted by a debt collector said they would develop a payment plan to repay the debt over time.
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