December 2007 Press Release

 

 

 

HIGHER ED SECRETARY CONCERNED ABOUT STUDENTS' CREDIT CARD USE

 

 

ANNAPOLIS, MD (December 19, 2007)  Maryland Higher Education Secretary James E. Lyons, Sr., today said that he was very concerned about a Maryland Higher Education Commission (MHEC) report stating that 52 percent of students or their parents were using credit cards to pay for unmet needs to cover the remaining cost of their college education.

The use of credit cards was second only to outside jobs (60 percent).

“This concerns me quite a bit,” Dr. Lyons said about the alarmingly high use of credit cards student use to pay for college. “Many students are already overburdened by paying off their student loans and the accompanying interest rates which are considerably lower than the interest rates being charged by credit card companies. Fifty-two percent is a staggering number which needs to be addressed. I absolutely do not believe this is the way to pay for college.”

Dr. Lyons said he did not believe the dangerous financial pitfalls of using credit cards is getting enough attention from students – and especially parents who may not know their children are using this method of payment for their college costs.

“I certainly want this message to get out to parents, students and financial aid officials at all of our Maryland institutions of higher learning,” Dr. Lyons said. “This is a very dangerous way of paying for higher education costs. We all know of the horror stories people are facing trying to pay off their credit card debt. Some are incapable of doing so because the interest rates and late fees are so high and they come due so quickly. If they aren’t paid off in full at the end of the month, the debt mounts incredibly.”

In addition to students using credit cards, an alarming number are filing for bankruptcy which substantially hurts their credit ratings and prevents them from buying houses at a reasonable mortgage rate, if at all. It also hurts them if they intend to go on to graduate school.

High APRs (sometimes as high as 24 percent) and exorbitant late fees were cited as reasons students should stay away from using credit cards when paying their college bills, according to the report released by MHEC staff.

The report also was of concern to Governor Martin O’Malley. “Certainly credit cards are needed in our society,” Governor O’Malley said. “You can’t book a flight, rent a car or build up credit without a credit card. I just don’t believe, however that they should be used to pay for their education. I applaud MHEC for bringing this to the public’s attention.”

The Maryland Higher Education Commission is a 12-member coordinating board responsible for establishing statewide policies for Maryland public and independent colleges and universities and private career schools. It serves as an advocate for more than 300,000 college students in Maryland, for the State and its needs, and for business and industry in Maryland.