College seniors are graduating with an average credit card balance of $4,100 – up from about $2,900 in 2004 – and much of that debt is directly related to their education expenses, according to a survey from SLM Corp.

The Reston, Va.-based student lender says college students used credit cards last year more than ever before, with nearly one-third of those surveyed charging direct tuition costs.

In all, 92 percent of undergraduate credit cardholders charged textbooks, school supplies and other direct education expenses, charging an average of $2,200 on education-related expenses, more than double the average of $942 in a 2004 survey.

“Too many students are at risk of overpaying for college by pulling out credit cards to pay for textbooks or even part of their tuition bill, instead of using less-expensive financial aid to cover these items,” said Marie O’Malley, consumer research director for Sallie Mae (NYSE: SLM).

The survey found that half of today’s college students have at least four credit cards, and only 17 percent said they regularly pay off all their balances each month.

The balances on American consumers’ credit cards fell at a 9.7% annual rate in February, the fastest rate of decline since late 1976, the Federal Reserve reported Tuesday.

Total outstanding consumer credit, including both revolving and nonrevolving credit, fell at a 3.5% annual rate, or $7.5 billion, to a seasonally adjusted $2.56 trillion, the Fed said.
Credit has declined in five of the past seven months. Prior to that, credit had declined in only one month in the previous 15 years.

The figures do not include mortgages or any loans backed by real estate.

Consumer borrowing plunged in February by more than analysts expected as Americans cut back their use of credit cards by a record amount.

The Federal Reserve said Tuesday that consumer borrowing dropped at an annual rate of $7.48 billion in February, or 3.5 percent, from January. Wall Street economists expected borrowing to slide by only $1 billion, according to a survey by Thomson Reuters.

The decline was led by a record drop in borrowing on credit and charge cards, which fell at an annual rate of $7.8 billion, or 9.7 percent. That is the sharpest drop in dollar terms since federal records began in 1968, and the steepest percentage fall since 1978.

The report shows consumers reluctant to ramp up spending as employers shed millions of jobs and the economy is mired in a recession.