College student credit card offer

Over 1000 students at 3 college campuses in the Northeast were surveyed. The sample was evenly divided by gender Eighty percent of the sample was traditional students. The original sample was reduced to 260 students having at least one credit card and was classified into groups as high or low academic performers. The groups did not differ in terms of the number of credit cards and outstanding balances; however, they differed significantly in the level of anxiety felt from carrying debt, perceived need to work, and perceived impact of employment on academic performance.

Much has been written in the popular press on credit card usage and spending patterns of American college students (Blair, 1997; Fine, 1999; Leon, 1998; Lynn, 1998; Murdy, 1995; Newton, 1998; Susswein, 1995). The proliferation of credit cards and their ease of acquisition ensure that college students today have more opportunities for making credit purchases than any prior generations of college students (Schor, 1998). Indeed, college campuses have become one of the most common sites for undergraduates with no credit history to sometimes acquire multiple credit cards. College officials and consumer advocacy groups have increasingly voiced their concerns about the effect that unlimited access to credit card spending may have on college student performance (Gordon, 1999; Hitti, 2000). Specifically, they have argued that the enhanced spending opportunities available through easy access to credit cards is likely to increase students' need to work extended hours to pay off outstanding balances, which could adversely affect academic performance (Grazier, 1998).

Many college administrators believe that credit card ownership encourages students to become consumers too early, at a time when they should be more appropriately engaged in academic pursuits. Lehigh University, for example, has banned credit card marketing on its campus because of its belief that credit cards create financial pressures for college students that negatively impact academic performance (Geraghty, 1996). Parks (1999) reported that college administrators perceived that credit card usage leads to depression and dropping out.

Predictably, financial institutions that actively market credit cards to college students take an opposing viewpoint and have suggested that college students are more sophisticated consumers than they actually are. These financial institutions further have contended that the majority of college students use credit cards responsibly, leaving college with reasonable credit card balances (Institute for Higher Education Policy, 1998). These institutions are highly motivated to "capture" these young consumers while still in college, as their research verifies that early customers tend to be lifelong customers (Vickers, 1999). Financial institutions have actively sought opportunities to work in partnership with colleges across the country to gain access to these thousands of prospective customers.

Many colleges hold an ambivalent attitude toward credit card solicitation on their campuses. Although many campus officials have decried the potential for excessive consumerism that unrestricted access to credit cards offers their students, they also have stood to reap significant financial rewards through working in partnership with the institutions issuing credit cards. Colleges routinely have allowed credit card banks to set up tables in student unions and other high-traffic areas and to promote social events sponsored by the colleges. At The Pennsylvania State University, for example, any student calling to register for classes over the telephone has had to first listen to a taped advertisement from a bank followed by an option to sign up for the card over the telephone.

As mirrored in the context of the larger society, the popularity of credit cards is beyond dispute. Credit cards have financed billions of dollars in purchases annually. Fueling this "possession obsession" is a prevailing culture of materialism, the availability of credit to all facets of society, and the lack of stigma attached to debt accumulation (Pinto, Parente, & Palmer, 2000). Students often acquire credit cards and become knowledgeable in their use prior to matriculating at their universities (Hitti, 2000). Indeed, one could reasonably argue that the current generation of college students is the first that has grown up having open access to credit and being comfortable in its use (Ritzer, 1995). How they choose to use credit cards (i.e., their spending patterns) therefore becomes an important issue in more fully understanding the effect that credit card usage can have on college students.

One aspect of any examination of college students' credit card activity is their roles as members of Generation Y (Y'ers), individuals born from 1977 to 1998 whose parents were born during the baby boom or Generation X (Von Bergen, 1998). This emerging market has been highlighted by the media and aggressively courted by marketers.

Y'ers have grown up as lifelong consumers, influencing the purchasing decisions of their parents in a variety of situations such as retail stores, at home, in cars, at the movies, during TV viewing, on vacation, and so on. Although some Y'ers had their own money and made their first purchases as young as preschool age, the median age for beginning these activities is 8 years (McNeal & Yeh, 1993). Shopping, buying, and going to malls are an integral component of socializing and serve as a major form of entertainment.

Changing social and cultural trends, along with technological advances have shaped many of the behaviors of this group (Omelia, 1998). Because a majority of Y'ers have been raised (or are being raised) in nontraditional families with mothers who work full-time, they have become independent consumers earlier in life than did previous generations (McNeal & Yeh, 1993). In addition, due to their technological sophistication, Generation Y is a prime target for companies using the Internet and other technologies to pitch their products and services (Krol & Cuneo, 1998). As a result, they are much more likely to use the World Wide Web to order merchandise and make payments (Mulhern, 19971.

The spending power of this generation is enormous. They are expected to have a buying power of roughly $156 billion by the year 2000 (Dugas, 1999). The majority of this group, ages 16 to 18, work either full- or part-time (Munk, 1997). According to Bureau of Labor statistics, Generation Y started working very young; 57% of all 14-year-olds have some work experience (Mandell, 1999). Not only does Generation Y have more money than previous generations, they like spending it; saving money for college or contributing a portion to the family were not major reasons for employment (Armstrong, 1999; Speer, 1998).

An enormous amount of research has examined factors that are related, either positively or negatively, to college student academic performance. Among the factors that have been found to predict, or at least correlate with student performance are: personal background of the student (Betts, 1999), academic factors (Bourde, 1998; Ely, 1990), stress (Barling, 1999; Goldman, 1997) and lifestyle activities (Cheung, 1998; Emmons, Wechsler, Dowdall, & Abraham, 1998; Maloney, 1993). Interestingly, one major component of college students' lifestyles is employment (National Center for Education Statistics, 1997). Today, 55% to 80% of students work while attending college (King, 1998; Miller, 1997). Although no doubt many students are forced to work to finance their education, several authors have argued that college students often voluntarily decide to seek employment so that they can make certain lifestyle choices. Employment offers them the means to have many of the material goods afforded by their parents.

The research on student employment and its impact on academic performance offer some mixed messages. Some findings show a nonsignificant relationship between part-time work commitments and academic achievement (Davis & Murrell, 1993; Hatcher, Prus, Endlehard, & Farmer, 1991). Other research suggests that students who work off campus tend to show less persistence in academic pursuits and tend to graduate later (Ehrenberg, 1987; Pascarella & Terenzini, 1991; Volkwein, 1989). For example, Bourde, Byrd, and Mondani (1996) found a negative relationship between hours of employment and academic performance in an introductory finance course. At the very least, employment has been shown to have a negative impact on whether students enroll the next year in school and tends to delay graduation (Ehrenberg, 1987; Kine 1998).