NARCA Survey: Impulsive Behaviors Dominate Despite Financial Education

A new online poll of 500 college students, sponsored by the National Association of Retail Collection Attorneys (NARCA), reveals alarming data on students’ views on personal financial responsibility and takes the first detailed look at behaviors behind frequently gathered data on students and debt. More than a quarter of college students think it is reasonable to run up a debt that might take months or years to pay off to "enjoy the moment."

Over the last several years, numerous surveys have endeavored to capture data on the growing amount of debt students acquire and maintain. But none have looked at what behaviors are feeding these bad habits.

"Our poll results show that too many young people are living for the moment and are not preparing for their financial future," said Robert Markoff, president of NARCA. "We conducted this poll to better understand college student views on debt. Having good credit probably has more impact on your life than having a minor criminal record. The type of impulsive behavior our data demonstrates can have significant and lasting effects on students’ lives."

Among key findings the poll found the following:

• More than 25 percent of college students think it is reasonable to run up a debt to splurge on a special celebration with friends at a restaurant or to use a credit card as a way to "raise cash."

• 31 percent of students polled do not worry about debt, believing that they can pay it back once they are out of school and earning a regular paycheck.

• An average of 23 percent chooses to ignore overdraft penalties and the prospect of months or years of paying off a debt incurred for a moment of fun.

"For the last three years I never worried about money — my friends and I did what we wanted to do," said Kalie Jones, a senior at Miami University in Oxford, Ohio. "I go out; if I see a dress I like, I’ll buy it; and for spring break we are thinking about going to an all-inclusive resort, a trip that will certainly cost a chunk of money. Now that I am entering my senior year, reality is setting in. I’ll need to get a job that will support my lifestyle, and I know I should change my spending behavior."

However, despite bad behaviors, today’s college students clearly understand they will have to act responsibly later on or they risk ruining their financial future.

• 92 percent agree that bad debt — defined as failure to pay bills that extends so long that a debt collector has to contact the consumer — will have a significant impact on a person’s ability to get credit in the future.

• 46 percent always keep records of their spending and receipts.

• 42 percent of those who already have been contacted by a debt collector would develop a payment plan to repay the debt over time.

"We are hopeful that by identifying key behaviors behind irresponsible financial decisions we can address this serious problem at its root," Markoff said. "It is understandable that many students want to enjoy themselves and live in the moment while they are still studying, but they should remember that the debt they accrue will need to be paid off in the future. We want consumers to know that debt-collecting attorneys will work with them and treat them fairly. Having access to credit is essential to a secure future, and it is important for everyone of all ages to understand how to act responsibly."

About the Survey
The National Association of Retail Collection Attorneys conducted a nationwide College Student Finance Poll of 500 college students (ages 18 and over) on Aug. 1-7. This poll examined the perceptions and knowledge that American college students hold relating to debt and personal financial management.

About NARCA
The National Association of Retail Collection Attorneys is a trade association dedicated to serving law firms engaged in the business of consumer debt collection. NARCA’s mission is to elevate the practice of consumer debt collection law through member networking, education, advocacy and outreach to others in the industry and the public. For more information about the Association, please visit our Web site at http://www.narca.org.