Credit card debt can pile up fast, especially when you’re in college. A new poll says that nearly one quarter of college students graduate with more than $5,000 in credit card debt. One in 10 of those surveyed said they owed more than $10,000. Some students sign up for credit cards on campus, when the card companies visit and offer t-shirts and other freebies. But of those students who did, 52 percent graduated with credit card debt. According to a 2007 study by student-loan provider Nellie Mae, the average credit card debt for college students is about $2,748. For a person who makes minimum payments, it would take nearly 18 years and an additional $2,506.01 in interest, at a rate of 15 percent, to pay off that debt. In addition, how you manage credit cards while you’re in college can affect your credit score for years to come, advises an expert from, the organization that sponsored the survey of 3,631 college graduates or people who have attended some college. Those surveyed ranged in age 22-40. offers these tips to follow to stay on top of your finances while in school:

  1. Understand finances – Students need to understand exactly where their finances stand. Regularly reviewing financial statements along with their credit reports from all three credit reporting companies is a good way to understand where they stand at any given time. Remember you can get a free credit report annually from each of the three credit reporting companies (Experian, Equifax and TransUnion).

  2. Watch for danger signs – Negative records such as late payments and collection accounts can remain on credit reports for 7 years. Students can keep their future finances healthy by avoiding these problems from the beginning. Library, cell phone and video store late fees can sometimes be turned over to collection agencies who may then report them to the credit reporting companies. So graduates should keep an eye out for these as well. It’s a matter of being responsible – your parents aren’t there to remind you to return your movie.

  3. Create a spending plan – Developing and following a monthly spending plan can help students understand how much they need to pay toward their debts and how much they can afford to splurge. Generally, low interest rates make it possible for graduates to spread their student loan payments over the life of the loan, but they should focus on paying off high interest credit card debts as soon as possible. Paying off debt may feel like you’re losing out on fun in the short term but it can help you afford fun in the future.

  4. Prepare for emergencies – A few preparations for the worst-case scenario can help students and recent graduates avoid financial problems in an emergency. To start, they should build up enough savings to cover their expenses for two to three months. If they find themselves out of a job or unable to pay back their debts, graduates should immediately call their creditors and lenders to explain the situation. Many federal loan programs have deferment and forbearance programs that allow borrowers to put their debts on hold temporarily.

  5. Consider consolidating – Look into your loan consolidation options. Often, students who consolidate within six months of graduation or who sign up for automatic payments can save even more. The last tip can help you feel less of a financial squeeze in paying off your student loans, but it will likely extend how long you take to pay them off and that means you’ll be paying more interest over the life of the loan. Personally I don’t want to pay my student loan lender any more than I have to.

August 26, 2008