Frugal Corner: Most collegians rely on plastic

Most of us know that college graduates leave school with a sheepskin and a pile of student-loan debt.

But a recent report shines a light on a new and growing kind of debt being taken out to pay for college: credit-card debt.

A huge majority – more than 90 percent – of college students surveyed last year said they’d put some kind of educational expense on a credit card, including books, supplies and fees, according to the survey from Sallie Mae. Thirty percent had used a credit card to pay tuition.

There may be worse ways to pay for college, but none come to mind. The high interest rates on the cards can stretch the repayment period far into the future, and if a young person makes a mistake like falling behind on a payment, the penalties are much steeper than those on a government-subsidized student loan.

Some critics might use the term “usurious.”

Here are some findings from the Sallie Mae survey:

• Among those who’d used a card for school expenses, the average was $2,200, more than double the average of $942 in 2004, the last year the survey was taken.

• Eighty-four percent of undergrads had at least one credit card. On average, students have 4.6 credit cards, with half of students saying they have more than four cards.

• Just 17 percent said they regularly pay off all cards each month. One percent said a parent or family member was paying off their cards.

As for the other 82 percent? They’re carrying balances.

Review your insurance

Washington’s state insurance commissioner is urging people not to jettison their homeowners insurance as a way of cutting costs.

“In most cases, the long-term risk heavily outweighs the short-term savings,” Commissioner Mike Kreidler said in a news release. “You might save some money now, but you stand to lose everything, or even end up homeless, in the event of a fire or some other problem.”

Kreidler’s office suggests other ways to save money without giving up coverage on your home:

• Review your coverage. If construction costs – and, therefore, the cost of rebuilding – have gone down, you might be able to reduce your coverage.

• Check to see if discounts are available through your insurer.

• Raise your deductible, which can save you money now – but cost you, of course, in the event of a loss.

• If you have made safety upgrades, such as new wiring, plumbing or heating systems, let your insurance agent know.

More information about shopping for homeowners insurance is available on the insurance commissioner’s Web site at insurance.wa.gov/publications/index.shtml.