My teenaged son is in college and now it seems he’ll be getting credit cards in college. Like most parents I’m apprehensive of how he’s going to use it. As you know many of the college students seem to be in huge credit debts and some are misusing them too. According to a student credit card debt survey done by Nellie Mae in 2007, graduate students averaged an incredible $ 8,216 on credit. Gail Cunningham, VP business relations, consumer Credit Counseling Service, Greater Dallas, “Graduate students are apparently doing what the rest of the nation is doing: using credit cards to sustain their lifestyle. “ This was the reason most college dropout incidents in that year took place because of credit card debts. Usually you might expect poor academics or anti-social orientation to make students discontinue but only 28 % students dropped out due to academically poor performance while 38 % dropped out due to credit card debts. In the year 2009, it seems to have increased all the more. The recession seems to have worsened the situation. Of course the new credit card issue rules limit the credit offered to students.

Naturally I am strongly motivated to stop him from using any of his credit cards. Like many parents I feel that do students really need to use credit cards?  Well, that might put my apprehensions to rest for sometime but I realize this cannot be a permanent solution. If I restrict my child, he’ll never learn to manage his money efficiently. As an adult he’ll have to use the credit card some day or the other. So, why not put him into the practice of using it properly? For this he should be made to recognize blunders that most of his friends make and learn from them.

Till not so long ago, college students were given 4 credit cards. This was a mistake by the crediting companies as well as parents. These credit cards worked like Aladdin’s jinn for these students. They used them extravagantly for their stylish lifestyles. Most of them were not aware of the consequences of debt and happily kept piling up their debt amounts. The parents and the crediting companies could have done well by identifying their dangerous spending patterns and warned them before of the consequences. Now with the new rules limiting credit pay to students this situation might be rectified.

It’s surprising to know that financial illiteracy is very much prevalent amongst college students of today. They don’t know anything about personal finance, loans, investments, savings and insurance. The government and financial institutions’ efforts to educate children, youngsters and young adults in financial planning and management in the present times is really noteworthy. I hope it makes the youngsters money conscious and helps them in improving their money management skills and maintaining a good credit score.

College students used their student loans to finance their lifestyles and that is utterly shocking! Parents should have noticed this before and warned their children. A lot of problems arise because we give our children more freedom than they deserve. I’m not asking you to curb their freedom, but to make them understand the consequences of what they do.