Desperate for money and awash in mounting debt, more than half of Maryland’s college students or their parents use credit cards to pay tuition, a new survey reveals. The widespread use of credit cards to cover tuition shocked the state’s higher education secretary.

“I was surprised to learn the extent because I’ve heard of students using credit cards for the bookstore and game room, but not to pay tuition,” Secretary James Lyons Sr. said. “That’s digging some students deeper in the hole. This is a very dangerous way of paying for higher education costs.”

About 52 percent of students enrolled in public universities and their families endure the higher interest rates and late fees of credit cards to finance school, says the survey, by the Maryland Higher Education Commission.

Students rack up credit-card debt because financial aid and loans often fall short of covering college bills.

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Even after receiving student aid, more than eight in 10 undergraduates at public colleges in the state still need an average of $7,415 to cover tuition.

The report cited skyrocketing interest — sometimes as high as a 24 percent annual percentage rate — and exorbitant late fees as reasons students should avoid credit cards to pay for college.

“We all know of the horror stories people are facing trying to pay off their credit-card debt,” Lyons said.

“Some are incapable of doing so because the interest rates and late fees are so high and they come due so quickly. If they aren’t paid off in full at the end of the month, the debt mounts incredibly.”

Many students then must file for bankruptcy, wrecking their credit ratings and jeopardizing their chances of pursuing graduate school and buying houses at reasonable mortgage rates, if at all.

Lyons plans to meet with university officials early next year to discuss what changes they can make to financial aid and other efforts to help students pay tuition.

“We’ve already got students graduating thousands of dollars in debt, and this just compounds that,” he said.

“I’ve been on campuses for the past 35 years and have never seen this kind of use of credit cards.”

Funding sources

Percentages

» Jobs: 60

» Credit cards: 52

» Private scholarships: 47

» Private loans: 45

» Personal savings: 42

» Gifts from relatives, friends: 27

» Federal tuition tax credits: 17

» Loans from relatives, friends: 17

Source: Maryland Higher Education Commission

kvolkmann@baltimoreexaminer.com