Exploding student debt on American campuses is having wide-ranging but little-noticed social effects that are being felt in family relationships, in young people's attitudes toward their peers and their school, and in their views about borrowing and saving, according to a new study of students and their money.

The long-term consequences of these shifts are not yet known, but the study's findings raise troubling questions for parents and colleges, as well as for the students themselves.

The findings suggest that easy access to credit can undermine parental authority, allowing some students to burst free from family restraints at a time when they are not well prepared to do so. Credit also makes it easier for less affluent students to succumb to social pressures to live beyond their means. And it creates a class of debt-saddled alumni and dropouts who assign at least some of the blame for their predicaments to the colleges and universities--blame that can show up in the form of decreased donations to the schools in later years.

The impact of debt, both education loans and credit cards, has been the subject of considerable debate in recent years, but much of the study has focused on the economic situations of students.

The financial services industry notes that many of these studies find that the vast majority of students handle credit responsibly and find credit cards and student loans both crucial to their education and a convenience in their everyday lives.

But the new study was conducted by a sociologist--Robert D. Manning of Georgetown University--rather than an economist, and it looked at students' feelings and attitudes as well as their financial situation. It concludes that credit problems are wider than earlier studies indicated and extend beyond the students' bank balances.

The report was released under the auspices of the Consumer Federation of America, which has long been critical of credit-card industry practices.

Its findings were mirrored by another study, released last week by the American Association of University Women, which found that credit card debt is a major obstacle for female high school graduates seeking to go to college and to college dropouts seeking to return to school.

The campus debt explosion is relatively new and is a function of college costs, which have risen much faster than family incomes, and aggressive marketing of credit cards to students by banks and other issuers. Together they have transformed "the cash-based economy of college life" that today's parents remember, Manning said last week.

"Clearly, credit and debt are shaping [today's] college experience," he said, and thus shaping the future lives and attitudes of students.

Manning, who has been studying students and credit for years and has done extensive surveying and interviewing on area campuses, pointed to three key areas in which these changes are becoming visible.

First, the college experience makes debt acceptable. Manning has encountered numerous instances of students who come to college from homes where parents have long emphasized the virtue of staying out of debt and buying only what you can pay for at the time. But these students cannot afford college without borrowing, and they hear "college administrators emphasize that debt is unavoidable but a good investment," he said.

In this same context, these students are bombarded with solicitations for credit cards, which are often couched in similar terms--building a good credit record, which will be valuable to you later on. And at the same time, the cards offer other seeming benefits, such as convenience (you don't have to keep running to the bank for cash) and security in emergencies (the car breaks down, for example). And many schools seem to add their own imprimatur by offering "affinity" credit cards emblazoned with the school's name.

As a Georgetown undergraduate named Jeff told Manning, "Everyone has to take on debt to go to college. . . . Everyone is expected to have student loans. . . . Even in my Midwestern [culture] which emphasizes that debt is bad, college loans are viewed as good debt."

This atmosphere made it easier for Jeff, first, to accept a credit card then to run up a balance on it and then on another and another. Today he has 16 cards, $20,000 in balances on them, a $10,000 debt consolidation loan and $30,000 in student loans. He is working two part-time jobs his senior year and hoping to land a good enough job at graduation to bail himself out.

Second, the easy availability of credit undermines parental control of their college-student offspring. In the days when parents controlled the purse strings, they had considerable leverage over both behavior and spending. In the past, credit card issuers demanded that parents co-sign for students' cards, but today they no longer do. Now, a student who wants to spend money in ways mom and dad wouldn't approve of can easily obtain a credit card and charge it.

Alcohol, tobacco, vacations, "self-mutilation," are common credit card expenses, Manning said. "I was astounded how many kids put down piercings" when listing their credit card expenses.

Cards also allow students to hide misbehavior. One student told Manning he got his first card when he was arrested for drunk driving and had to hide the $500 expense from his parents.

Cris, a student Manning interviewed at the University of Maryland, related the conflicts she had had at home with her "stingy" father who squawked when Cris or her mother so much as turned on an air conditioner. Her parents assumed she was behaving herself when she got to college because the only money she had was her small savings from her high school job. It never dawned on her father that banks "would give essentially unsecured loans to teenagers who lacked experience in managing their economic affairs or discipline in controlling their consumption," Manning said.

Wrong.

With her new cards, Cris felt socially and economically empowered, and "when she needed economic help [the cards] were always there for her. And they did not ask questions about why she needed the money or moralize about her spending patterns," Manning said.

As she slipped deeper and deeper into trouble, she was able to stay afloat only by adding new cards and shifting balances. Even becoming a part-time student so she could work full time was not enough. She tried to renegotiate, but the debt counseling service told her she was too far gone.

When she declared bankruptcy at age 23, Cris discharged $22,522 in debts on 13 cards and a $5,000 consumer loan.

Third, a theme running through many of the student disaster stories is their desire to keep up a standard of living they can't really afford. In some cases, peer pressure is a key, as it was for Jeff, who felt he'd lose his friends if he got rid of his credit cards. In other cases, students who are used to having most of the things they wanted as teenagers are unable to adjust to spending constraints imposed by college costs.

The pressure is especially acute on students at expensive schools such as Georgetown, where many of their classmates come from affluent families. The median family income of GU students is $155,000 (vs. $75,000 at the University of Maryland), Manning said, so meals out and trips and the like are no problem for many. But that leaves many less well-heeled students to choose between debt and opting out of social activities.

Manning has seen students try all sorts of strategies for staving off disaster--surfing from card to card, shuffling balances, and the like. But a particularly pernicious one, common at less expensive schools, is to in effect refinance credit card debt with student loans.

At institutions where student loan limits are more than sufficient to cover tuition, students borrow as much as they are allowed and use the extra to pay off or pay down credit card debt. The hitch: Government-guaranteed students loans are generally not dischargeable in bankruptcy, so if the roof really falls in, they can continue to be saddled with what was in large part consumer debt.

The consequences of the huge debts can be devastating. Two women told a Consumer Federation session last week of their children's suicides, in which they felt debt played a major role.

A key trap, students told Manning, is the very small minimum payments many credit cards require. Most students can manage $30 or $40 a month, at least at first, and often continue to borrow and obtain new cards until even the minimum payments are beyond them. By then, though, their actual debt is likely to be enormous.

Often parents can and do bail them out, but many are stunned to find out how much their child owes.

"A lot of parents don't understand that by the time they hear about a kid having a problem, it's really big problem," he said.

An Expensive Lesson for Credit

In taking on debt, students sometimes fail to look beyond the size of their monthly payments. This table shows the time it would take in months to pay off a $1,500 debt, assuming no late fees or new purchases.

Annual interest rate

Monthly

payment 10.8% 13.8% 16.8% 19.8% 22.8%

$25 87 102 132 282 Infinite

$30 67 75 87 106.5 159

$50 35 37 39 42 45

SOURCE: Robert D. Manning