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:

Online education platforms could scale high-quality STEM education for universities
Online and blended (online and in-person) STEM instruction can produce the same learning outcomes for students as traditional, in-person classes at a fraction of the cost, finds research published today in Science Advances.
Technology in higher education: learning with it instead of from it
Technology has shifted the way that professors teach students in higher education.
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.
Protestantism still matters when it comes to education, study shows
A new academic study, the first of its kind, reveals a significant and positive historical legacy of Protestant religion in education around the world.
Individual education programs not being used as intended in special education
Gone are the days when students with disabilities were placed in a separate classroom, or even in a completely different part of the school.
How does limited education limit young people?
A recent nationally-representative US Department of Education study found that 28 percent of fall 2009 ninth-graders had not yet enrolled in a trade school or college by February 2016 -- roughly six-and-a-half years later.
'Depression education' effective for some teens
In an assessment of their 'depression literacy' program, which has already been taught to tens of thousands, Johns Hopkins researchers say the Adolescent Depression Awareness Program (ADAP) achieved its intended effect of encouraging many teenagers to speak up and seek adult help for themselves or a peer.
More Education News and Education Current Events

Trending Science News

Current Coronavirus (COVID-19) News

Top Science Podcasts

We have hand picked the top science podcasts of 2020.
Now Playing: TED Radio Hour

Listen Again: Reinvention
Change is hard, but it's also an opportunity to discover and reimagine what you thought you knew. From our economy, to music, to even ourselves–this hour TED speakers explore the power of reinvention. Guests include OK Go lead singer Damian Kulash Jr., former college gymnastics coach Valorie Kondos Field, Stockton Mayor Michael Tubbs, and entrepreneur Nick Hanauer.
Now Playing: Science for the People

#562 Superbug to Bedside
By now we're all good and scared about antibiotic resistance, one of the many things coming to get us all. But there's good news, sort of. News antibiotics are coming out! How do they get tested? What does that kind of a trial look like and how does it happen? Host Bethany Brookeshire talks with Matt McCarthy, author of "Superbugs: The Race to Stop an Epidemic", about the ins and outs of testing a new antibiotic in the hospital.
Now Playing: Radiolab

Dispatch 6: Strange Times
Covid has disrupted the most basic routines of our days and nights. But in the middle of a conversation about how to fight the virus, we find a place impervious to the stalled plans and frenetic demands of the outside world. It's a very different kind of front line, where urgent work means moving slow, and time is marked out in tiny pre-planned steps. Then, on a walk through the woods, we consider how the tempo of our lives affects our minds and discover how the beats of biology shape our bodies. This episode was produced with help from Molly Webster and Tracie Hunte. Support Radiolab today at Radiolab.org/donate.