March 19, 2001, 1:20PM

College students up to their ears in credit card debt

Last week was spring break, that short season when so many college students sip -- and spend -- their way to social splendor.

But for many of them, the hangover can last for years.

RESOURCES

Chart: College credit

We're not talking beer here.

More than ever, college students around the country are overindulging in credit cards, trashing their credit and leaving themselves open for future problems.

That's what happened to Krutar Patel, a 21-year-old pre-med major at the University of Houston.

When Patel enrolled as a freshman three years ago, credit card hawkers on campus were pitching the glory of plastic.

"They were pretty aggressive," he said. "I told them I was running late for class, but they said, `It will only take two minutes.' It was like they were giving away free credit cards."

So Patel filled out the forms and got his first credit card in about four weeks.

At first, it was easy. He simply paid the balance in full every month.

But with credit card offers abounding around campus, Patel, like thousands of his peers around the nation, caved in to temptation.

Two years and five credit cards later, he had accumulated some $4,000 in debt, most of which went for tuition, books, restaurant tabs and gasoline.

Then Patel lost his part-time job, and the spinning started.

Not only was he unable to make the minimum payments, but credit holders -- already slapping him with high interest rates -- were tacking on late fees. That pushed his balances over credit limits, which in turn incurred even more penalties.

"I didn't know how I was going to pay them," he said. "It was a big problem."

Last fall, Patel reached out to Advanced Debt Management, a financial counseling outfit.

The group helped him consolidate his debt and persuaded some of his creditors to slash their interest rates and shave off various fees.

So Patel, who was unaware that some companies do credit checks on prospective employees, is back to making payments.

If all goes well, his debt will be paid off in about 21/2 years, just as he heads to medical school.

Such stories ring woefully familiar with credit counseling groups.

Is it a serious problem?

"Oh my goodness, yes!" said Jean Law, director of administration for Consumer Credit Counseling Service, a national nonprofit group that offers free money management counseling.

The issue has become so significant that CCCS launched a federally funded program two years ago called "How to Score a 4.0 in Personal Money Management," which targets college students.

"There have been a lot of university faculty who have expressed a lot of concern about how long students will have to pay off debt," said CCCS' local education director Ray Anderson, who said students often drop out of school so they can work full time to pay off their debts.

CCCS has hosted 150 seminars at most Texas universities and community colleges in the past two years, aiming to educate young adults on the proper use of credit cards and the importance of credit reports.

Anderson said there is a definite need for the seminars.

"It seems the younger students are, the less experience they have on the proper use of credit cards," he said. "They have no idea how to set up a personal budget. Consequently, many students are deep in debt ... Credit cards are too easy to get. Students pretty much charge to the limit in a hurry. We're seeing more students coming in for help."

A big factor, he said, is the lack of self-discipline.

"There is a tendency, it seems, where individuals beginning college want to live the same lifestyle they've lived at home," he said.

"The majority of their purchases are not essential. I say that having heard them firsthand in our seminars and classes. They never had thought about how hard it would be to get rid of that debt. They'll have more than one or two credit cards in many cases, and they're getting cash advances on those cards. But credit cards aren't bad. They've just got to be used wisely."

Consider the dismal possibilities for a student facing the nation's average undergraduate credit card balance of $2,748.

If the student were using a card with an interest rate of 18 percent and made only the minimum monthly payment of $75, he would pay on the card for more than 15 years -- forking out as much in interest as he originally borrowed.

The first step to avoiding that scenario, CCCS officials say, is to stop charging and to make purchases with a check card, which withdraws cash directly from a checking account.

Students also should track their daily and monthly expenses.

"They need to see where that money goes," he said. "Those small items add up."

From there, students should establish a written budget, figure out where spending can be cut -- often on dining out and partying -- and stick to their plan.

CCCS, which offers free one-on-one counseling and information online at www.cccsintl.org, can help students develop budgets and establish debt payment plans.

Education on money management is key to avoiding debt problems.

The younger the students the better, said Anderson, who added that CCCS also hosts summer workshops for elementary schoolchildren.

"We teach them that money doesn't grow on trees," he said.

No doubt such a lesson would be a good one for many adults as well.

Americans charged $1 trillion on credit cards last year, with an average balance of $4,400 -- up 123 percent in 10 years, experts say.

And bankruptcy filings have been at an all-time high over recent years.

Patel said that, although he is relieved that he is now managing his money better, he regrets ever having opened a credit card account.

And he has advice for other students being approached by credit card marketers on campus.

"Don't even look at them," he said. "I wish I hadn't. I don't have anything to show for all the debt. The only thing I've got are some books, because the bookstore wouldn't buy them back."