While numerous national studies have indicated the financial practices of students attending four-year institutions, there is a “lack of knowledge about the credit practices and financial education needs of community college students” (Lyons & Hunt, 2003, p. 63). However, we do know that community college students are faced with similar challenges including credit card management and maneuvering the cost effectiveness of transfer. A 2003 study of student leaders attending community colleges in the state of Illinois found that those students “may be more likely to misuse and mismanage their credit [cards] than students attending four-year institutions” (Lyons & Hunt, 2003, p. 68). Fifty-four percent of those students reported having at least one credit card and, of those, thirty percent reported they had reached their borrowing limit and twenty-six percent were, or had been, delinquent.

The national average student loan debt for 2006 college graduates (from both public and private institutions) was roughly $21,100. The average student loan debt for 2006 college graduates in California was estimated to be $17,270, making it one of the “low debt states.” Nonetheless, the average debt for a 2006 California graduate rose by 15% from the previous year while the national average rose by 8% (Project on Student Debt, 2007). Any personal debt, including credit card debt, is not included in these totals.

Students who transfer to a four-year institution do not always receive the same level of scholarship opportunity as a native four-year student. “When a two-year college student attempts to transfer to a four-year institution, she typically will be faced with larger bills. Even highly qualified transfer students are not as likely to receive scholarships from receiving four-year institutions, which typically focus scholarship monies on freshmen and on retaining high-achieving or needy native students" (Borland, 2004). Sixty-four percent of students graduating with a four-year degree, including transfer students, do so with student loan debt and, of those, 39% graduate with “unmanageable levels of debt” (King & Bannon, 2002). The level of unmanageable debt is even more pronounced for African American student loan borrowers (55%) and Hispanic borrowers (58%). The average credit card debt for four-year students is over $2,000 and almost a quarter of undergraduate students report using credit cards for tuition and fees (Nellie Mae, 2004).

Impact on the Academic Community

Both two-year and four-year institutions are increasingly held accountable for the level of transfer student success. Statewide course sequencing, transfer partnerships, increasing funding for transfer student scholarships, and reviews of state transfer migration patterns all underscore the emphasis being placed on increasing transfer success rates. Simply put, degree completion in a timely manner is important to every higher education institution. (Jacobs, 2004).

If the debt crunch is a barrier to student transfer, then finding a way to provide students with strategies to understand and manage financial issues is the key to increasing transfer student success. Programs on both sending and receiving campuses are needed to assist students in managing their levels of debt.

Furthermore, it should be noted that helping students manage personal expenses via a money management program can enable students to limit borrowing at the community college, thus saving their loan eligibility for when they transfer. Limiting student loan debt at the community college can also reflect positively on the campus’ federal cohort default rate (Yamamoto, 2005).

Given the complexities of credit card management, financial aid packaging, and time management constraints, it is increasingly important that students understand money management and debt. Because of increased debt, many of our graduates will be faced with extra hours of work and a sizeable debt repayment obligation. Between 1991 and 1999, bankruptcy filings by those under the age of 25 rose by approximately 51%. (We do not have data that separates those who are college students for either traditionally-aged or non-traditional students.) Although legislative changes have reduced the frequency of bankruptcy, it is staggering to realize that many of our graduates will have limited time and money to volunteer or to donate to community service agencies, religious centers, and charity projects. We are faced with the possibility of a generation unable to provide the level of leadership that many of our local communities rely upon because of unmanageable levels of debt.

Implications for College Administrators

Campus administrators face a number of challenges in providing programs and services to a diverse student population that includes part-time students, commuting students, and students with extensive family and job responsibilities. Furthermore, while 60% of community college students consider financial aid advising “very important,” only 17% “often” take advantage of it (CCSSE, 2007). Limited resources frequently prevent individual consultations and there is no shortage of time-consuming issues designed to promote student success. Nonetheless, a campus interested in implementing a money management program should consider what type of program would be most effective for the campus. A focused program can vary from one campus to another but might include a combination of websites, student programming, and awareness campaigns that target faculty and staff. A few of the strategies might include:

• Make information on student financial issues available to the faculty and staff. Students will often discuss their financial concerns with faculty or staff and they need to be equipped with relevant information on available resources.
• Promote statewide programs that address college affordability such as the “I Can Afford College” campaign in California.
• Provide programs that encourage students to manage personal living expenses. Mass transit, shared housing, knowledge on apartment leasing and car buying, and budget planning can all affect a student’s cost of living and debt management.
• Provide additional resources to financial aid and/or student services offices for publications and financial programs. The staff may choose to provide workshops and small group sessions on specific topics.
  
• Partner with external and internal groups. Consumer credit companies, banks, and credit unions will often present programs and materials. Student groups or academic departments can provide on-campus partnership opportunities.
  
• Limit or eliminate opportunities for credit card companies to promote credit card applications on campus.
  
• Make information about the cost of the local four-year colleges readily available to students. Provide them with information on applying for student scholarships and grants.
  
• Lobby four-year institutions for additional scholarships for transfer students.
  
• Offer a course on student money management. Even a one-hour elective can provide necessary tools to assist students in gaining financial management skills.
  
• Develop a website on financial issues for students and publicize its existence. An example might be the Student Money Management Center at the University of North Texas website. It can be accessed at http://www.unt.edu/moneymanagement/.
  
• Encourage those students who are averse to borrowing to seriously consider the risk versus benefits to determine whether borrowing is actually their best course of action (Burdman, 2005).
  
• Provide an opportunity for students to explore whether a short-term certificate program (six months to a year) can help them get a higher paying job to pay for the rest of their education.

References

Borland, K. W. (2004). Enrollment Management Issues. In B. Jacobs (Ed.), The College Transfer Student in America: The Forgotten Student (pp.28-46). Washington DC: AACRAO.

Burdman, P. (2005). The Student Debt Dilemma: Debt Aversion as a Barrier to College Access. CSHE Research & Occasional Paper Series, 13(5). Retrieved January 3, 2008 from ERIC database.

Community College Survey of Student Engagement (2007). Committing to Student Engagement. Reflections on CCSSE’s First Five Years. Austin, TX: Community College Leadership Program.

Jacobs, B. C. (2004). Today’s Transfer Students: Trends and Challenges. In B. Jacobs (Ed.), The College Transfer Student in America: The Forgotten Student (pp. 2-14). Washington DC: AACRAO.

King, T. & Bannon, E. (2002). The Burden of Borrowing: A Report on the Rising Rates of Student Loan Debt. Washington, DC: The State PIEGs Higher Education Project.

Lyons, A. C., & Hunt, J. L. (2003). The Credit Practices and Financial Education Needs of Community College Students [Electronic version]. Financial Counseling and Planning, 14. 64-74.

Nellie Mae (2005). College Students Get Wise about Credit Cards. Retrieved January 2, 2008 from http://www.nelliemae.com/aboutus/collegestudentswise052505.html.

Project on Student Debt (2007). Student Debt and the Class of 2006. Retrieved January 3, 2008 from http://ww.projectonstudentdebt.org/state_by_state.php.

Student Money Management Center. (2007). National Data on Student Debt. Retrieved January 3, 2008 from http://www.unt.edu/moneymanagement/.

Yamamoto. C (Fall 2005). Student loans. iJournal: Insight into Student Services, 11. Retrieved January 3, 2008 from http://www.ijournal.us/issue_11/ij_11_04_articleframe_Yamamoto.html.

About the Author

Bonita C. Jacobs, Ph.D.
Vice President for Student Development
Associate Professor of Higher Education
University of North Texas, Denton, Texas

Dr. Bonita C. Jacobs is Vice President for Student Development and Associate Professor of Higher Education at the University of North Texas in addition to serving as the Executive Director of the Institute for the Study of Transfer Students. She holds a B.A. in Spanish and a M.Ed. in Counseling from Stephen F. Austin State University, a Ph.D. in Higher Education Administration from Texas A&M University, and intensive Spanish study from Universidad de Morelia and Instituto Technologico de Monterrey.

Dr. Jacobs is a former editor of the Journal of College Orientation and Transition and received the NODA President's Award and the NODA Award for Outstanding Scholarly Contributions to the Orientation Profession. She is the recipient of the “John Jones Award for Outstanding Performance as a Senior Student Affairs Officer” from the National Association of Student Personnel Administrators Region III; the “Ted. K. Miller Achievement of Excellence in Assessment Award” from the Council for the Advancement of Standards (CAS); and the “Gold Excellence Award” from the National Association of Student Personnel Administrators. She is a member of the National Advisory Board for the National Resource Center for The First-Year Experience and Students in Transition and a faculty member for the “Donna M. Bourassa Mid-Level Management Institute” for the American College Personnel Association She is the author of numerous publications including The College Transfer Student in America: The Forgotten Student and is a noted speaker and consultant on student transition.