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More parents are paying their college kid’s credit card bills

As inflation clamps down on all Americans, more college students are relying on their parents to cover their everyday expenses.

A 2023 College Student Financial Survey revealed that 54 percent of college students receive help from their parents for credit card bills—a jump from 43 percent last year.

Inflation has likely played a role in the uptick as more than 9 in 10 college students say it has made them more concerned about their financial future.

The current inflation rate is at 3.67 percent after reaching a high of 9.1 percent in June last year, the highest jump in 40 years. The price hikes affected everything from food, gas, and services with even the price of eggs surging nearly 50 percent in late 2022.

A normal inflation rate hangs around 2 percent, so while there has been overall improvement, Americans are still feeling the pressure on their monthly spending on necessities like groceries and housing.

Ronald Ehrenberg, a professor at Cornell University and an expert in the economics of education, said the increase in parents’ covering student expenses might be based on certain improvements in financial aid programs.

“With improvements in financial aid programs, many student loan burdens are lower and parents understand that there is less need to save funds to help students pay off loans,” Ehrenberg told Newsweek.

The lingering effects of a generation impacted by the pandemic may also be playing a role, as students look to spend more money on social activities that they weren’t able to before.

“Students were scarred by the COVID years and the steps taken to prevent its spread,” Ehrenberg said. “Although COVID may be growing again with better vaccines, (they) feel safer and want to be out doing more things and spending more.”

Rising Costs for College Students

Inflation often has an extreme effect on college students since they tend to bring in little to no income as they work part-time, if at all, while taking a full course load of classes.

That means jumps in gas, food, and tuition prices take a harder hit to college students’ weekly budgets as they try to get by without gaining new or additional debt.

College students shared their concerns in an editorial written for Monmouth University’s student newspaper, The Outlook, last year.

“We don’t have all the money in the world, especially if you’re someone who is paying to put yourself through college,” said one editor. “I think the ‘broke college student’ stereotype was created because we as students know that we are most likely going to be in major debt when we graduate, so we try to save as much as we can.”

Many expressed concerns that without the end of inflation in sight, the price surges will continue to leave a large mark on their generation’s finances.

“It’s a little scary since it seems as though there is no silver lining at the end of all this,” said one editor for the paper. “A lot of things are uncertain, and for many of us, this is potentially the first recession we are experiencing as adults. So, we aren’t living in ignorance—we can’t live in ignorance since we have expenses we are responsible for.”

It makes sense that more students are leaning on their parents for help today as college tuition itself reflects current inflationary trends.

“Inflation is real,” Beth Akers, a senior fellow at the American Enterprise Institute, told Inside Higher Ed. “And it may be a talking point for institutions as they defend price increases in the coming years, but they’re absolutely facing higher costs that all of us are facing throughout the economy today.”

Boston University hiked tuition prices by 4.5 percent. Similarly, University of Virginia students will pay 4.7 percent more, and the Syracuse University student body is facing an uptick of 4.5 percent, reflecting larger trends across the country.

Meal plans have also climbed in cost in recent years.

“Dining plans will have to go up,” David Jewell, senior vice president for business affairs and finance at Cleveland State University, told the nonprofit education newsroom The Hechinger Report. “We can be creative about things like trying to minimize food waste and about the menu choices to be more economical when prices are up on certain items. But we’re going to have to pass on at least a portion of that extra cost to students and their families.”

Even student loan interest rates surged in recent years. In the 2022-2023 school year, undergraduate loan interest rates climbed from 3.73 percent to 4.99 percent, per the Department of Treasury.

The additional college costs coincide with declining enrollment at colleges.

From fall 2019 to fall 2021, when colleges were experiencing remote classes and a shift in learning that many have dubbed ‘Zoom University,’ enrollment was at a considerable low, declining by 6.6 percent, according to the National Student Clearinghouse Research Center.

To adjust to those changes, colleges had to cut costs, firing hundreds of thousands of employees, and students had to pay for it while also facing higher costs on their other everyday expenses like food and housing.

Credit Cards and College

Credit cards typically offer college students a way to start building their credit early so that they will be able to buy a house or car later on. However, many students lean on them when their bank accounts get too low to cover living expenses, meaning there’s a risk of going into debt if students aren’t careful about budgeting.

In these cases, parents might step in to make sure their college-aged children are able to get by without falling victim to credit card debt, as the 2023 study shows.

Another study from US News and World indicated that 42 percent of college students have credit card debt. And for 28 percent of that sample of 1,203 undergraduate students, the debt exceeds $2,000.

Almost 50 percent said they use their cards for school expenses, like books and tuition, while another, nearly half, used it for living expenses.

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