WASHINGTON -- A survey sponsored by collection industry lawyers has suggested that at least part of students heavy debt load arises from their bad credit habits.
According to the National Association of Retail Collection Attorneys, which sponsored the survey, more than a quarter of the self-selecting respondents thought it "reasonable to run up a debt that might take months or years to pay off to 'enjoy the moment.'"
"Our poll results show that too many young people are living for the moment and are not preparing for their financial future," said Robert Markoff, president of NARCA. "We conducted this poll to better understand college student views on debt. Having good credit probably has more impact on your life than having a minor criminal record. The type of impulsive behavior our data demonstrate can have significant and lasting effects on students' lives."
The survey found 31% of students polled do not worry about debt, believing that they can pay it back once they are out of school and earning a regular paycheck and that an average of 23% chose to ignore overdraft penalties and the prospect of months or years of paying off a debt incurred for a moment of fun, NARCA said.
"For the last three years I never worried about money--my friends and I did what we wanted to do," said Kalie Jones, a senior at Miami University in Oxford, Ohio. "I go out; if I see a dress I like, I'll buy it; and for spring break we are thinking about going to an all-inclusive resort, a trip that will certainly cost a chunk of money. Now that I am entering my senior year, reality is setting in. I'll need to get a job that will support my lifestyle, and I know I should change my spending behavior."
But NARCA said the survey also found that students are aware of the need to handle credit more intelligently and responsibly.
Ninety-two percent agree that bad debt--defined as failure to pay bills that extend long enough for a debt collector has to contact the consumer--will have a significant impact on a person's ability to get credit in the future.
Roughly 46% always keep records of their spending and receipts and 42% of those who already have been contacted by a debt collector would develop a payment plan to repay the debt over time.
"We are hopeful that by identifying key behaviors behind irresponsible financial decisions we can address this serious problem at its root," Markoff said. "It is understandable that many students want to enjoy themselves and live in the moment while they are still studying, but they should remember that the debt they accrue will need to be paid off in the future. We want consumers to know that debt-collecting attorneys will work with them and treat them fairly. Having access to credit is essential to a secure future, and it is important for everyone of all ages to understand how to act responsibly."