Do Community Characteristics Relate to Young Adult College Students’ Credit Card Debt? The Hypothesized Role of Collective Institutional Efficacy

Abstract

This study examines the extent of emergent, outstanding credit card debt among young adult college students and investigates whether any associations existed between this credit card debt and the characteristics of the communities in which these students grew up or lived. Using data (N = 748) from a longitudinal survey and merging community characteristics measured at the zip code level, we confirmed that a community's unemployment rate, average total debt, average credit score, and number of bank branch offices were associated with a young adult college student's acquisition and accumulation of credit card debt. For example, a community's higher unemployment rate and lower number of bank branches were associated with a young adult college student's greater accumulated debt. Community characteristics had the strongest associations with credit card debt, especially after controlling for individual characteristics (i.e., a young adult college student's race and financial independence) and familial characteristics (i.e., their parents' income and parents' discussions of financial matters while growing up at home). The findings may help to understand the unique roles that communities play in shaping children and young adults' financial capability, and how communities can be better capacitated to support the financial goals of their residents.

What Determines University Students’ Online Consumer Credit? Evidence From China

“…In a follow-up study, Norvilitis et al (2006) found that the lack of financial knowledge, age, delay of gratification, number of credit cards, and attitudes toward credit card use were related to debt. Individual characteristics (e.g., race and financial independence) and familial characteristics (e.g., their parents' income and parents' discussions of financial matters while growing up at home) were associated with a young adult college student's acquisition and accumulation of credit card debt (Friedline et al, 2017). In a more recent study, Limbu (2017) found that knowledge about credit card and social motivation were inversely associated with credit card misuse mediated through credit card self-efficacy.…”

“…Some studies have explored the factors that influence university students' credit card debt (e.g., Friedline, West, Rosell, Serido, & Shim, 2017;LaRose & Eastin, 2002;Limbu, 2017;Serido et al, 2015;J. Wang & Xiao, 2009).…”

“…They also found that Internet access has a positive effect on credit card balances, which suggests that consumers with Internet access are prone to higher balances. Some studies have explored the factors that influence university students' credit card debt (e.g., Friedline, West, Rosell, Serido, & Shim, 2017;LaRose & Eastin, 2002;Limbu, 2017;Serido et al, 2015;J. Wang & Xiao, 2009).…”

The Financial Services Environment and Schools' Savings Rates in the San Francisco Kindergarten to College Program

“…Variations in the local financial services environment matter because of the relationships between neighborhoods' brick-and-mortar financial services and their residents' participation in economic life, such as paying bills (Friedline, Despard, and West 2017a), receiving health care (Eisenberg-Guyot et al 2018;Melzer 2011), and accessing credit (Bertrand and Morse 2011;Bhutta 2014;Bhutta, Skiba, and Tobacman 2015;Friedline et al 2017b). For instance, having banks within closer proximity to or more highly concentrated in neighborhoods is associated with being more likely to use these financial services, have access to credit, and experience increased opportunities for entrepreneurship (Brown, Cookson, and Heimer 2016;Friedline et al 2017b;Kerr and Nanda 2009). The lack of bank access negatively impacts local small business lending, which leads to a reduction in employment growth rates, and these effects are particularly found to affect those living in lower-income neighborhoods (Nguyen 2014).…”

Emerging Adults' Social Justice Engagement: Motivations, Barriers, and Social Identity

“…Emerging adults today face unique circumstances compared to previous cohorts, given the societal, cultural, and economic changes that have arisen in recent decades (Arnett, 2007). For instance, emerging adults have greater participation in postsecondary education and technical training, enter marriage and parenthood later in their lives, and have greater financial debt than previous generations (Arnett, 2007; Friedline et al, 2017). Moreover, emerging adults are living during a time with greater globalization (Gattino, Tartaglia, Rollero, & De Piccoli, 2019) and economic inequality (Herring & Henderson, 2016; Horowitz, Igielnik, & Kochha, 2020).…”