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Hayhoe examines college students' use of credit at two points in time. One hundred twenty college students from six universities were studied in the spring of 1997 and 1999. Results show that 41 students had more credit cards in 1999 than in 1997.

Several studies have examined college students' use of credit at one period in time. Several researchers found that older students scored higher on the affective credit attitude scale than younger students (Davis and Lea, 1995; Hayhoe, Leach, and Turner, 1999; Xiao, Noring, and Anderson, 1995). The affective credit attitude score measures how a student feels about using credit. A high score indicates that the student enjoyed using credit.

The purpose of this study was to examine the affective credit attitude of the same college students at two points of time and investigate whether or not the affective credit attitude score increases with age.

REVIEW OF LITERATURE

Credit Attitudes

Changing attitudes toward money are an important catalyst within the consumer culture (Ritzer, 1995; Zukerman, 2000).

The current culture produces young adults who exhibit high credit card usage. Between 70 and 80% of all college students have at least one credit card and most have an average of three credit cards (Armstrong and Craven, 1993; Jamba-joyner et al., 2000; Hayhoe and Leach, 1997, Hershey, 1996; Jover and Allen, 1996; O'Malley, 2001; Punch, 1991; Xiao et al., 1995). Nearly two-thirds of all college students received credit cards on or before their freshman year (Susswein, 1995). Xiao et al. (1995) examined credit card usage and attitudes among college students at an eastern university and found that 82 % of the students surveyed had favorable affective credit card attitudes. This was measured by the credit attitude scales.

College students have grown up in a credit card society and use this type of debt freely (Ritzer, 1995). Lea, Webley, and Walker (1995) express this as the growth of a "culture of indebtedness." An important factor in predicting debt status was whether respondents know other people around them who are in debt. A "community of debtors" creates an environment that reinforces one's beliefs and attitudes. When college students are trying to "fit in" with a group, joining a "community of debtors" can be an outcome.

Davies and Lea (1995) examined attitudes toward student debt (student loans, bank overdrafts, credit cards, and money owed family and friends) by using a sample of students from the United Kingdom. Their findings suggested that higher income predisposes students to higher levels of debt. Because their long-term income expectations would be high, they were accustomed to a relatively comfortable lifestyle and reluctant to relinquish it. Their examination suggested two distinct processes linking income and debt: (1) low income combined with high necessary expenditures and (2) the higher their incomes, the higher the debt. They found that students, initially, were not disposed to debt. However, when students found themselves in an environment where going into debt was convenient and easy, their attitudes changed.

Hayhoe et al. (1999) examined factors influencing college students' credit attitudes at five universities. They found that students with high affective credit attitude scores were likely to have credit cards.

Number of Credit Cards

The Hayhoe et al. (1999) study also identified nine variables (1) affective credit attitude score, (2) age, (3) cognitive credit attitude score, (4) gender, (5) having taken a class in personal finance, (6) borrowing from friends and relatives, (7) retention money attitude, (8) money used as a reward in family of origin, and (9) preparing a list before shopping. These were significant predictors of students having four or more credit cards.

The Education Resources Institute and The Institute of Higher Education Policy (1998) found the potential for high credit card debt increases when four or more credit cards are owned and the average credit balance is over $1,000. Additionally, the potential increases when tuition and fees are charged. They found between 6% of students had four or more credit cards.

Jamba-Joyner et al. (2000) sampled 217 undergraduate students at a Southeastern university to learn more about which students are not likely to pay their credit card debt in full each month. Women, students of color, students with low socioeconomic status, and students with a large number of credit cards were not likely to pay credit card debt in full each month.

Similar research has been conducted in nonstudent populations. Tokunaga (1993) found that heavy users of credit cards perceived money as a source of power/prestige, experienced more anxiety about financial matters than the control group, and were less concerned about retaining money. Lea et al. (1995) examined economic socialization and debt. They found debtors tend to be people whose parents were relatively well-off or who became independent of their parents early. The researchers hypothesized that those whose parents were considered well-off might reflect higher expectations, making it harder to manage on a low income; those who became independent earlier might reflect a decision for earlier marriage or cohabitation, or less postsecondary education.

Students with high affective credit attitude scores are more likely to purchase clothes, electronics, and entertainment on credit. They are more likely to charge travel, gasoline, and auto maintenance, as well as food away from home (Hayhoe et al., 2000). The higher the affective credit attitude scores, the higher the likelihood that students carried outstanding balances on several credit cards. The researchers also found that students with low affective credit attitude scores were more likely to feel guilty after they had made a purchase using a credit card. Xiao et al. (1995), in their study of college students, found that age had no effect on credit card ownership and the number of credit cards, but did have effects on the frequency of using credit cards. Younger students used credit cards more than those who were older. In-state students used cards more than out-of-state students. The researchers deduced that different college students might view owning credit cards and using credit cards differently. The result may be a variety of influences on college students' credit card debt problems. College students may see credit cards as a means of increasing their purchasing power while on a very limited income. It may enable them to participate in activities that peers are engaged in. It may allow students to feel they belong even though they do not have the money to pay for the goods and services.

METHODS

Participants

The participants in this study were college students between the ages of 19 and 44. Students at six public universities (University of Kentucky, University of Rhode Island, Kansas State University, Louisiana State University, State University of New York at Oneonta, and University of Northern Iowa) participated in the study. Five hundred students at each university were randomly selected to receive the first survey questionnaire, a total of 3,000 surveys. Due to the sensitive nature of the information, surveys were anonymous. Responses were received from 480 students, a response rate of 16%. Several reasons for this low response rate were identified. The primary reason may have been the sensitive nature of the data being collected. In addition, students move and do not always send change of address forms to the Registrar's office. Because the questionnaires were completely anonymous and not numbered until returned, the researchers had no way of knowing which students did not return questionnaires. Only students who agreed to give up their anonymity to participate in the second survey were identified. This was a stipulation of the internal review board as financial information was requested.

The first survey data were collected during the Spring 1997 semester and the second survey data were collected during the Spring 1999 semester. Students at the participating universities come from all socioeconomic levels.

Sample

Although the first survey was a random sample, the second one consisted only of students who agreed to participate. Of the 480 students in the first survey, 260 agreed to participate in the second one. The low number may have been due partly to the loss of anonymity because they had to give the researchers their name and address and the researchers had to be able to identify their survey in the first survey to perform comparisons.

Because of unusable addresses and consent forms, 237 students were contacted to see if they would participate in the second collection of data. Surveys were received from 120 of these students. This is a response rate of 51% (120/237), but only 4% of the original sample.

The useable sample consisted of 46 male (38%) and 71 female (59%) respondents, with three students not answering this question. The mean age for the first survey was 23 and 25 for the second. Most students were single (78% of the first survey and 65% of the second). Only 36% had taken a course in personal finance in either high school or college. Four students had taken a course since the first survey data were collected. See Table 1 for a comparison of descriptive statistics of the first survey data from respondents who participated in survey 2, and the survey 2 data.

ANALYSIS

Descriptive statistics were used to describe the sample. Logistic regression was employed to analyze the change in affective credit attitude scores.

The students were grouped into those whose affective credit attitude score had decreased, those whose score had stayed the same, and those whose score had increased. The scores were grouped, as the object was to compare the direction of movement in the scale score rather than the actual score. Logistical regression can be used for both binary categories and a small number of ordinal categories, as is the case in this analysis (SAS Institute, 1995). The affective credit attitude scale was a modified version of the scale (personal communication, J. J. Xiao, March 18, 1996) presented in Xiao et al. (1995).

RESULTS

Ninety-five percent of the students (114) in the second survey had at least one credit card, which was up from 84% (95) of the students during the first survey. Thirteen percent of the students had obtained their first credit card since the initial data were collected. At the time of the second survey, 32% of the students had a joint credit card. Eleven percent of all students had at least one joint card with parents, and 18% had a joint card with a spouse. Of those students holding at least one credit card (jointly or individually), 68% reported carrying a balance on at least one credit card, and 13 % carried the maximum balance on at least one card.

Students had a variety of debts. At the time of the second survey of data collection, 19% of students had home mortgages, 38% car loans, 2% home equity loans, 63 % student loans, 9 % outstanding medical bills, and 10% loans from families and friends. When the first survey was administered, 12 % had home mortgages, 21 % car loans, I % a home equity loan, 50 % student loans, 5 % outstanding medical bills, and 8% loans from family and friends. Thirty-five percent of the students said they had received a past due notice in the last year, which was up slightly from 32 % in the first survey. The number of students who said they were currently behind in rent or utility payments was down from 5 to 3 % in the second survey.

Twenty-seven percent of the students had started to pay on their student loans and one was already in default. Approximately one-third of those students said it would take them longer to repay their loans than they had expected. Forty percent of those students said the payment on their loans was higher than they expected. Onethird of those students had consolidated their loans. Fifty-nine percent of the students with student loans were still in the deferment period.

Fifty-two percent of the students had fewer credit cards at the time of the second survey, 21% the same number, and 54% more credit cards. Twenty-two percent of students had fewer credit cards with a balance at the time of the second survey, 51 % the same number, and 24 % more cards with an outstanding balance. The amount of the outstanding balance at the time of the second survey ranged from less than $50 to over $5,000, with the mean being $500 to $750. Eight percent of the students had fewer cards with a maximum balance, 62 % the same number, and 5 % more credit cards with a maximum balance.

Contrary to what was hypothesized, 40% of the students had lower affective credit attitude scores, 18% stayed the same, and 35% had higher affect scores. The only significant relationship found was that students who had graduated were more likely to have lower affective credit scores.

(See Table 2 for complete results of the logistic regression.) It appears that students who graduated with lower scores have misused credit and are now managing the consequences of their actions. This could be a reason they do not feel as good about using credit.

DISCUSSION AND IMPLICATIONS

The sample size for this study is small. Results should be viewed as an exploratory first step in longitudinal studies of college students' use of credit. The data show that most students seem to be managing their debt load (only one was in default on their student loans and three were currently behind in rent or utility payments).

However, the number of respondents receiving past due notices in the past year was up slightly. Many respondents had incurred new debts since the first survey data were collected. More respondents had reduced the number of credit cards they carried than had increased the number. However, more respondents had increased the number of credit cards with an outstanding balance.

The finding that those participants who had graduated were more likely to have lower affective credit attitude scores is contrary to previous findings that students' affective credit attitudes

increase with age. It appears that once out of school, college students' prior experience with misuse of credit may lead to lower affective credit attitude scores. Further longitudinal studies of affective credit attitudes are necessary to confirm this finding. Studies for longer periods of time are essential to examine the long-term effects of taking on additional debt, especially student loan debt and credit card debt, on students' ability to repay the their debts and their attitudes toward debt. In addition, studies of other populations are necessary to examine if this relationship can be generalized to other populations besides students.

The implication that students' high favorable credit attitudes may cause some to misuse credit provides guidance to educators; they may need to add greater emphasis on the long-term effects of debt. Helping students realize how much the debt actually costs and how long it takes to repay may influence the amount of debt incurred.

Approximately one third of the respondents who had started to repay student loans found that it would take longer than they expected to repay and that the payments were higher than anticipated. Demonstrating the impact of carrying high amounts of debt on one's ability to save and meet future goals are also important for learners to limit the amount debt incurred.

Age, number of credit cards with an outstanding balance, and change in income, although not significant (P < 0.10), bear further study. (See Table 2.) Older participants had lower affective credit attitude scores, as did participants with more cards with outstanding balances and participants whose income had gone down. It appears that circumstances may play a role in determining affective credit attitude scores. This result is opposite from previous studies where affective credit attitude scores increase with age. They may increase only while the student is still in school.

Jamba Joyner et al. (2000) report a growing concern among higher education professionals, parents, and students that financial counseling is needed on campus. This researcher and Joo and Grable (1999) would like to take this one step further and see personal finance as part of the university studies required curriculum or at least an option in the curriculum.

Both policymakers and educators have roles to play in helping students maximize the use of credit. Policymakers need to review credit card companies' practices of soliciting young people. Educators can organize learning experiences so students become familiar with the assets and liabilities of credit and maximize their decision-making options in selecting and managing debt. Credit is a tool to assist in achieving personal and family goals.

Acknowledgments

A 1998 Massachusetts Avenue Building Assets Fund Grant from the American Association for Family and Consumer Sciences provided funding for the second survey data collection. Special thanks to Dr. Lauren J. Leach at NW Missouri University who was an investigator on the first data collection survey and co-author of many of the research articles from the data.