Nav: Home

Students in credit crisis

September 15, 2015

New research from the USA suggests that college students are well aware that they should be personally responsible for their finances, including their card obligations, but this awareness rarely correlates with limiting the debts they accrue during their time in higher education. Details of the study are reported this month in the International Journal of Behavioural Accounting and Finance.

Lucy Ackert of the Department of Economics and Finance, at Kennesaw State University, in Georgia, and Bryan Church of the Scheller College of Business, at Georgia Tech, Atlanta, USA, explain that policymakers are concerned about the limited financial expertise of young adults and how inexperience with financial matters can leave students with excessive debts. Ackert and Church have undertaken three parallel studies to better understand the financial acumen or otherwise of college students and whether or not their level of awareness correlates with financial responsibility.

"Credit cards have become a way of life, offering convenience and purchase protection, allowing for online shopping, and providing a cushion in case of emergencies," the researchers explain. Many young people with no credit history can successfully apply for a credit card. As such, consumer advocates have expressed concerns over the years that those who may not necessarily have the financial means to support such credit card use are vulnerable to unscrupulous companies and can be led into serious, long-term financial harm.

College students are an important demographic for financial services, the team adds. However, they may be characterized in general as "having limited resources and being financially naïve and not only lacking experience but being susceptible to lapses in self-control." The team points out that credit card issuers compete vigorously for college students' business, partly in the hope of attracting potentially loyal customers for future dealings, such as car loans and mortgages, after graduation.

The disconnection between recognizing the need to be financially responsible and actually being so must be addressed before students learn too many bad habits with their money, the team's results suggest. "If college students are to make wise financial decisions they must internalize the obligation to exercise financial responsibility," they say. "It is their duty to spend prudently and to pay their bills when due, and a failure to do so is unacceptable." Education regarding the misuse of credit cards and the consequences of long-term debt ought to be enshrined in a college education at an early stage of the academic career, the research suggests.
-end-
Ackert, L.F. and Church, B.K. (2015) 'Credit cards, financial responsibility, and college students: an experimental study', Int. J. Behavioural Accounting and Finance, Vol. 5, No. 1, pp.1-26.

Inderscience Publishers

Related Education Articles:

The new racial disparity in special education
Racial disparity in special education is growing, and it's more complex than previously thought.
Education may be key to a healthier, wealthier US
A first-of-its-kind study estimate the economic value of education for better health and longevity.
How education may stave off cognitive decline
Prefrontal brain regions linked to higher educational attainment are characterized by increased expression of genes involved in neurotransmission and immunity, finds a study of healthy older adults published in JNeurosci.
Does more education stem political violence?
In a study released online today in Review of Educational Research, a peer-reviewed journal of the American Educational Research Association, three Norwegian researchers attempt to bring clarity to this question by undertaking the first systematic examination of quantitative research on this topic.
Education interventions improve economic rationality
This study proves that education can be leveraged as a tool to help enhance an individual's economic decision-making quality, or economic rationality.
More Education News and Education Current Events

Best Science Podcasts 2019

We have hand picked the best science podcasts for 2019. Sit back and enjoy new science podcasts updated daily from your favorite science news services and scientists.
Now Playing: TED Radio Hour

Erasing The Stigma
Many of us either cope with mental illness or know someone who does. But we still have a hard time talking about it. This hour, TED speakers explore ways to push past — and even erase — the stigma. Guests include musician and comedian Jordan Raskopoulos, neuroscientist and psychiatrist Thomas Insel, psychiatrist Dixon Chibanda, anxiety and depression researcher Olivia Remes, and entrepreneur Sangu Delle.
Now Playing: Science for the People

#537 Science Journalism, Hold the Hype
Everyone's seen a piece of science getting over-exaggerated in the media. Most people would be quick to blame journalists and big media for getting in wrong. In many cases, you'd be right. But there's other sources of hype in science journalism. and one of them can be found in the humble, and little-known press release. We're talking with Chris Chambers about doing science about science journalism, and where the hype creeps in. Related links: The association between exaggeration in health related science news and academic press releases: retrospective observational study Claims of causality in health news: a randomised trial This...