Recession Microeconomics

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From the Chronicle of Higher Education comes news that students and recent graduates now display riskier financial behavior than in prior years. According to the article:

Researchers found that students had higher debt levels than the baseline sample had reported. Among students with an unpaid credit-card balance, the average balance was $152, up from $95 in the earlier report. Among those with education debt, the average grew from $1,041 to $1,932. …The researchers found the gap between debt levels for white and minority students had widened.

But while the study, “ Arizona Pathways to Life Success for University Students,” which follows more than 2,000 University of Arizona students, indicated that students had slightly better financial knowledge from when the study began, they were also making some very dangerous money decisions:

There was also a large jump in the use of “risky” coping strategies, like dropping a class, postponing health care, or using one credit card to pay off another, though relatively few students reported these behaviors.

Admittedly, spending habits at the University of Arizona, one of Playboy’s Top 10 Party Schools 2009, might not necessarily be typical of the national undergraduate population. But it’s clear that there’s a trend in the direction of both more education debt and bad coping strategies.

It’s always hard to make responsible money decisions when the economy is tanking. It’s interesting to see that undergraduate students aren’t doing much better than the population at large.

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Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer