College Costs and Credit Cards: How Student Credit Card Use Influences College Degree Attainment

Since the turn of the twenty-first century, going to college has become increasingly financially difficult in the United States. Tuition prices continued to rise, state funding for higher education declined, and the mean family income declined or stagnated for all but the top 20 percent of families (Goldrick-Rab 2016). In a period where college has risen to be the preeminent way Americans can make a better life for themselves, it is becoming more difficult for Americans to pay for college. Financial aid does not cover as much of the price of college as it once did (Goldrick-Rab 2016), and college students are relying on financing methods like student loans more than ever before. Student loans, however, are not the only credit-based financial strategy college students use to pay for college (Manning 2000, 2005). With the explosion of consumer credit access from the 1980s to the 2000s, college students are using credit cards, many times to bridge gaps in their budgets as they try to pay for college. This paper utilizes data from the Education Longitudinal Study (2002–12) to examine the link between college student credit card use and bachelor's degree attainment and demonstrates that college students who carry a balance on their credit card from month to month have a lower likelihood of completing a bachelor’s degree, net of other important factors. Research in the fields of financial counseling and planning, consumer studies, public policy, sociology, and health has explored college student credit card spending behaviors, associated health and educational outcomes, and the influence of family backgrounds on credit card use. This paper extends this existing body of research by considering how college student credit card use influences educational outcomes.