College Students and Personal Finance Education: Should be limited college students personal finance (credit cards) or student

loans?
Abstract This research looks at how commerce on the Internet is conducted almost entirely with credit cards or with Internet accounts established with credit cards and how, for many, particularly young people for whom cash has never been a necessity, it is easy to give in to the urge for instant gratification, even when there are no funds available to support this gratification. It shows how, in particular, college students may fall victim to this trap, since they may not see a credit card purchase as spending with real money, they have little or no experience with credit cards or loans, and they are new to living independently from parents who have advised them not to buy things in the past. It examines the how, increasingly, student debt upon graduation is a crippling burden upon the student. It explores how the potential solution is to educate college students how to use their credit cards wisely and how to structure student loans and career plans with an eye toward the future, both of which can be accomplished by attending personal finance classes and by beginning with smaller credit card lines.

Introduction The problem of student debt is twofold, and therefore, managing student debt should employ a double-barreled approach. Credit card/consumer debt is only one facet of the student debt issue, but students need to be able to distinguish between their necessary federally-funded student loan debt and their self-imposed credit card debt. In recent years, it has become common practice for credit card vendors to set up shop on college and university campuses, usually near the school bookstore. Once established on campus, credit card companies attempt to lure students into signing up for credit cards by offering free incentives such as tee shirts or water bottles. It is all too easy for students to succumb to the temptation for and the ease of obtaining credit cards when these credit lines are pushed so forcefully toward the often naive college student cohort."

Project Background Background to the problem College students learn a lot of lessons while at school. Some lessons are from classrooms and books, and others are from life experiences. One of those life experiences is the danger of poor debt management when using a credit card. College students who apply for and receive credit cards but exhibit poor debt management skills leave school not only with credit card and maybe school loan debt, but also a poor credit record, which can make starting out on their own difficult. According to an article on Channel 13 in Rochester, New York's website in April 2009, the average student owed $3,200 when graduating from college or leaving school. For students who have student loans, this increases the amount of debt a student has before getting that first job out of college. When college students leave school, the debt is not the only thing they bring with them as a result of their credit cards. If the student fails to make payments on time while in college, the student can ruin her credit. This can have an effect on the student's ability to purchase items such as a vehicle when she leaves school, as well as purchasing a home or renting an apartment. The convenience of credit cards may tempt students to live beyond their means. Consumer and credit counseling groups pointed out that excessive credit card debt and late payments can impair a cardholders credit rating and make it more difficult and costly to obtain credit in the future. Credit card issuers emphasize this same point in information they make available to students. Many of these sources also noted that students who pay only the minimum balance each month may not understand the cumulative effect of interest rates. For example, a college student with a credit card loan of $2,000 and an interest rate of 19 percent who pays back the loan at $40 per month will incur interest charges of $1,994 by the time the loan is paid in full.15 At this rate, it would take 100 months, or over 8 years, to pay back the loan (Credit Card Minimum Payment Interest Calculator, Daniel C. Peterson, www.webwinder.com). There is much controversy about whether college students should take on debt to finance their education. Many people disagree because numbers show that college students' debts are increasing and are sometimes very difficult to pay off. Some people feel credit cards and loans are something college students should avoid. Only a few people believe otherwise. College students should take on debt to finance their education because not only is the students able to pay for their education with this money, but they are also building up their credit, something that is essential in today's society. All they have to do to keep this debt from growing excessively is be responsible. Most college students do not have $20,000 in a savings account set aside for college expenses. Many do not qualify for financial aid. Still others do not receive money from numerous scholarships. So, where can these students get money to pay for college? Student loans can be the deciding factor on whether to stay in college or not. The article "Graduated Payments: There Are Ways To Get Out From Under Those Big College Loans," by the staff of Consumer Reports, informs us that debts are payable. The article gives us a number of options, form getting help from parents, to making reasonable deals with the loan providers. This proves that debts are not

impossible to pay back. Credit cards are also a subject of discord among the authors of the five articles. In her article "Do College Students Need Credit Cards? Hardly," Michelle Singletary states various ways that college students can obtain good credit without the use of credit cards, such as having utility bills under their name. Although this method is valid, credit cards build up credit much faster. Having heard the saying from childhood, "love makes the world go round" is enough to make one ponder, is it really love or money these days? Saturated with advertisements from retailers, credit card companies, mortgage companies and fly by night get rich schemes; it makes one wonder what really "makes the world go round" in the 21st century? Love can certainly bring a sense of contentment, but it cannot buy a house, pay the bills or college tuition for that matter. Money, however, can do all those things. Unfortunately with accumulation of money, come additional problems and responsibilities alike. Creating a balance of spending and saving is the key to a successful financial life. According to Sharon K. Zoumbaris, author of Teen Guide to Personal Financial Management, "It really can be summed up in the most elementary equation: if your expenses are less than your income, the difference represents potential savings and investments. The more you can save, the better your financial foundation."(Zoumbaris, 2000). Nevertheless, even with all the methods available for use to control finances, there are common themes among most approaches to successful personal finance management. The three most basic premises are managing personal cash flow, avoiding personal debt growth, and maintaining retirement savings rate.

Project aims and objectives Research objectives The skill the most people dont have but could benefit from mastering is money management individuals go through life not knowing how to manage their money. You might ask yourself, Why should everyone possess these skills? simple, look around and see if you can find somebody that is in poverty, and you wont have to look very far. When individuals possess money management skills they can provide themselves with a number of ways to improve the quality of life and maybe even pass those skills on somebody who needs them. So the research is supposed to accomplish many objectives: Educate college students how to use their credit cards-college students should know why is necessary to have a credit card and use it wisely. Some students just hold credit cards because they are influence by their friends or by the media. Sometimes, they do not really what is used for, Help college students how to avoid student loans-once they have credit cards, they will use it anyhow. Students will just spend and will think about their expenses. And then, they will finish with debts. Also, some students finish with because they were aware about the interest rate,

 Educate college students how to structure their career plans-personal finance is very important for college students. They will learn how to manage their money and to be aware of credit cards companies and the interest rate they give. So, personal finance education will learn to college students how to manage personal cash flow, avoid Personal debt growth and maintain retirement savings rate. Research questions It's no secret, college students have money problems. It might sound stereotypical, but money issues have troubled college student for years. The problem has been growing in the past decades. With credit cards readily available for students and loans becoming easier to acquire, students are running into a spiral of bad credit and long lasting debt. College loans are easy to acquire either from the government or from a private lender. Some students do not realize the debt they may acquire from college loans alone. Adding a credit card with a few thousands to your debt can easily contribute to the problem. Students may accumulate thousands in debt, not realizing that after college, they will have to pay it back. Credit cards are just plain horrible for students and for most post graduates. Student will charge everything from designer jeans to pizzas. Even after graduation, the young adults still abuse credit card usage. The problem with students and credit cards is that most students do not pay off the balance every month. When a student buys a pizza on their credit card and do not pay off the balance that month, they will be paying for that pizza over and over again. (Chu) A twenty dollar pizza could easily turn into a fifty dollar pizza over a year's time. Credit card companies then add late fees and they usually have high interest rates, causing most students to work years after college to pay off their debt. It's bad enough that students are in debt because of student loans, but now adding the credit card bills, thousands of dollars must be paid off. Loans are becoming a bigger problem each day. Since students will need to spend thousands of dollars on college, they will need to get the money somewhere. The majority of students do not have "rich parents" so they will need to find fund How college students can avoid students? How college students can avoid failing to credit card companies trap? How to help college students to save money for their future? Significance/Justification This research provides a guide for students entering college, students already in college, and students who are to soon graduate from college that will inform these individuals of the environment of the mortgage industry and credit card companies. The paper specifically examines the impacts of students loans and the job market upon the home buying outlook for individuals once they have graduated from a college or university. The research demonstrates that the outlook for students attending colleges under today's provisions of financial aid and

student loan programs will create a great burden of debt for these students. It also demonstrates that colleges have overcharged students at exorbitant rates and that the driver for this was the federally guaranteed student loan program.

Research program Research design The research is about student loans and credit cards, the problem is to know whether it should be limited. The research is an exploratory work based on questionnaire, interview and observation. The areas of research are in a university, the university staff and the students. The research will touch many aspects: Education Spending And Federal Financial Aid, The Basics Of Student Loans For College, Personal & Professional Risks Of Student Loan Debt, Investigation of a Program of Study at a College or University, Funding Mechanisms. For the primary research, the main respondents are the students. It expected for them to explain which types of problems they used to face by using college student loans or credit cards. And also, why are the reasons for using to using student loans and credit cards. This research will be done by questionnaire. As respondents, there is also universitys staff. The research will be conducted by interview. It expected to the staff to talk about their perceptions towards the use of student loans and credit cards. It also will be expected from them to give their own opinion about student loans and credit cards and whether it should be limited.

Deliverables Expected results This research examines private lending practices of institutions that provide private funding for college expenses to students. The research explores the impact of these loans on college students' standard of living, home ownership, income to debt ratios and other factors associated with repaying high-price student loans. The research also provides a literature review that indicates that a solution for the rise of student loan private lender default rate should be addressed proactively so as to avoid a crisis in the student loan lender industry as has been witnessed in the mortgage industry recently. It can be concluded that a student should regard him/herself as an

asset, and make some financial assumptions about how much he/she will earn in the future, and what his/her debt capacity is at present.

Resources References Anderson, S., 2009, Till death do you part: Despite new government programs, theres no easy solutions for college loan debt, McClatchy-Tribune Business News. Banjo, S., 2009, Your money matters ( A special report), Wall Street Journal, pp.R.1. http://www.articlesbase.com http://www.gao.gov. Johnstone, D. Bruce and Preeti Shroff-Mehta, 2000, Higher Education Finance and Accessibility: An International Comparative Examination of Tuition and Financial Assistance Policies. Buffalo: Center for Comparative and Global Studies in Education <http://www.gse.buffalo.edu/org/IntHigherEdFinance/>. Kobliner, B., 2000, Get a financial life; personal finance in your twenties and thirties, Simon & Schuster. Orman, S., 2005, The money book for the young, fabulous and broke, Riverhead books. -PokerPlayingDad, 2009, credit card problems facing college students, viewed 28 July 2009, <http://www.ehow.com/about_5094811_credit-problems-facing-collegestudents.html>. Saunders, M., Lewis, P. and Thornhill, A., 2002, Research methods for business students, Prentice Hall. www.gocollege.com/survival/students-guide-personal/-finance.html. www.webwinder.com.