With more and more students in Canada having access to credit these days, the big question is who should pay it off – the one who racked it up, or his or her parents. The Canadian public seems to be quite divided on the issue.
A large number of working middle-class Canadians considers that students should fully shoulder the responsibility for serving their credit card debt. According to them, the beauty of older children is that they can actually earn money; hence, they should be able to pay off their credit card debt on their own.
However, finance experts say that credit card debt can become an overwhelming burden for students, if left to cope with it on their own. In the United States and Canada, credit card debt is one of the most common reasons for one dropping out of college as students have to take up a full-time job. Thus, college credit card debt becomes a potential threat to the future of many young Canadians.
In fact, some parents end up paying student credit card debt if they co-signed. Many of the good credit card dealers still require a parent to co-sign for the credit card of their son or daughter, if he or she is still in college. In fact, this used to be the rule in Canada and the United States in 1990s but nowadays, it has become a fair exception. Credit card companies have targeted college students as a good market niche to tap on, and few of them seem to care about students’ financial inexperience and exposure to a high credit card debt risk.
According to Dr. Carol Carolan, Executive Director and Founder of the Center for Student Credit Card Education, parents should educate their children on matters related to money and credit management early on, or else they may need to bail them out of credit card debt later in life. In his words, students who know the real value of money and the real meaning of credit are less likely to rack up a credit card debt. It becomes clear that it is not so important who will pay off the students’ credit card debt when it occurs, but whose responsibility it should be to teach them financial literacy and responsibility.
Truly, the universities have their share in the rate of credit card debts accumulated by students, as many of them invite credit card companies on their campuses in pursuit of easy profit. There are universities like the Rochester Institute of Technology (RIT) and the University of Central Arkansas (UCA), which have included courses in personal and consumer finances in their curricula. This is a step in the right direction, and their example should be followed by Canada’s biggest universities as well.
Now, if there are so many credit card dealers that lure naïve college students with attractive credit card offers, there must be a number of credit consultants, who have specialized in helping students out of credit card debt. This could also be a good solution, especially if their parents are knee-deep in debt themselves.
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