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College can be a crash course in debt

Story Highlights

• Credit expert: Too many college students don't understand finances
• Students should only have credit cards when they have a job, expert says
• Student debt can damage credit ratings for years
• Student's advice: Don't buy anything you can't pay for in cash
By Phillip Lucas
Special to CNN
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Editor's note: CNNU is a feature that provides student perspectives on news and trends from colleges across the United States. The views expressed in this article are not necessarily those of CNN, its affiliates or the schools where the campus correspondents are based. Contributor Phillip Lucas is a student at Howard University in Washington.

WASHINGTON (CNN) -- For many college students, being short on money and being away from home presents a dangerous temptation: credit cards.

Kandace Barker, a freshman public relations major at Howard University, said shopping with credit cards made her feel as though she could still buy clothes even if she didn't have money.

Barker has credit cards from New York and Company and Victoria's Secret, where she used to work.

Along with the debt from the two cards, Barker faces thousands of dollars in student loans after graduating. She is currently about $9,000 in debt.

"I think before I was an impulse shopper, but now I can't be. That's why I have so much debt ... especially at Victoria's Secret," said Barker.

Too many college students go off to school without understanding finances, said Shalonda Jones, a representative of the National Foundation for Credit Counseling.

Parents make the mistake of not introducing financial literacy to children at a young age and most parents are equally clueless as to what it takes to remain financially stable, she said.

"Shoving kids out the door [to college] is like shoving them off a cliff," Jones said regarding students leaving home without knowledge of personal finance.

"We all know when you're away from home with a little freedom and money, students tend to take that freedom and lose their heads," Jones said.

Ashley Shaw, a freshman broadcast journalism major at Howard University, says she shops with cash, not credit, so she's aware of how much she can spend. But even without the credit card, she occasionally runs into trouble. She recently overdrew her checking account during a shopping trip.

Right now, Shaw isn't in any credit or student loan debt. However, she expects to take out student loans in the near future to cover her college expenses.

"As a younger teen, I actually received a credit card and didn't know my spending limit and that kind of thing, so I maxed out the credit card and was penalized for it, and that's why I don't have one now," Shaw said, explaining her previous troubles with credit.

"My parents covered it," Shaw said when asked how the debt was repaid.

Many students don't realize that the purchases and payments that are made during college can directly influence the amount of items (or the quality of the items) that may be bought later in life, including cars and homes.

However, a bad credit score is not a life sentence, said Ted Daniels, founder and president of the Society for Financial Education and Professional Development. Consistent payments and reducing debt will improve a student's credit report and credit score, he said.

Daniels recommends students wait until after their freshman year to apply for credit cards.

Shaw agrees that freshmen should hold off on credit card applications.

"As a freshman you're kind of careless as to what you're doing with your money, and who has to pay for it. Especially since most freshmen are not working. By sophomore year it's early enough to build up your credit history, but not too late to not be conscious of exactly how credit works," she said.

Baker added that credit cards are an easy trap to fall into.

"I guess I just have to manage my money better. There's a difference between what I want and what I need. I should just stick to what I need," Barker said. "I would wait until junior year, maybe the summer of sophomore year to get one little credit card, but not until you're actually responsible."

When asked what advice she would give to students applying for credit cards, Barker's response was straightforward.

"Don't do it, period. But, if you do, don't purchase anything that you can't pay for with cash. And make regular payments."


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Student Ashley Shaw uses her debit card because of past difficulties with managing credit card expenses.

SPECIAL REPORT

• Gallery: Your credit report
• Explainer: Good and bad debt
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