Collegians Use Plastic to Meet Higher Tuition : Debt: As costs rise and loans grow more scarce, students turn to charge cards to finance their education.

Poor timing. It’s the only explanation that makes sense to Martin Mederos, a member of a new generation of 20-something college graduates saddled with credit debt.

Poor timing in the sense that Mederos, 26, entered school in 1984 during one of the longest economic expansions in the United States, only to graduate from UC Santa Cruz in 1990 at the outset of the longest recession to strike California since the Great Depression.

Poor timing because while Mederos was in school the cost of tuition at the nine-campus UC system almost doubled.

Poor timing because Mederos, like countless other students, racked up thousands of dollars in credit card and school loan debt to finance his education, then came up empty searching for a job with a $10,000 debt hanging over his head. He finally gave up and took a job delivering pizzas for Round Table.

Mederos’ story is like that of many recent graduates who have left school with huge debts, failed to find work in their chosen field and used high-interest credit cards to meet school and living expenses.

“We are not buying VCRs and camcorders,” said Mederos, whose degree is in economics. “We are buying macaroni and cheese and econ books.”

While students in the future may be able to rely on President Clinton’s national service program to help offset college costs, recent debt-laden graduates are suffering the effects of a financial aid system that has failed to keep pace with the skyrocketing cost of education.

In the last five years, tuition has ballooned 44% at the nation’s public four-year institutions and 40% at private colleges, according to the College Board. At UC schools, the price of tuition is nearly double what it was five years ago.

At the same time, federal grants have declined 20% over the last 12 years, according to the American Council on Higher Education. And grants have been harder to come by since the 1980s, when the U.S. Department of Education began emphasizing loan-based aid, a move that has pushed many students to think twice about seeking aid.

“A lot of students would rather deal with the high interest of credit cards than the bureaucratic hassles of the financial aid office,” said Eric Dey, director of UCLA’s Higher Education Research Institute.

Once out of college, students are facing a bleak employment picture.

Despite a shrinking job market, the number of college graduates entering the work force has continued to increase as the number of 18- to 24-year-olds has risen. As a result, more graduates have to take jobs in fields that don’t require a college degree.

Since the mid-1970s, nearly one in five college graduates has been unable to find work or has taken a job that didn’t require a four-year degree. The number of unemployed and underemployed graduates is projected to climb to 30% by 2005, according to Kristina J. Shelley, an economist at the Bureau of Labor Statistics.

“Right out of college if you told me I was going to be slinging pizzas, I would have called you a liar,” Mederos said. “I soon revised my way of thinking and did what I had to do to pay the bills.”

Mederos moved in with his parents while working at Round Table, eventually leaving for a position selling audio/video merchandise. Today he does data entry at Bank of America for $10 an hour.

“The debt is the factor that has forced me to take jobs out of pure necessity,” he said. “The credit cards are just bearing down on me. If I have to go to the hospital, it goes straight to the credit card. If my transmission blows, the credit card.”

Many who have built up sizable debts say they knew what they were getting into when they started charging. But the dramatic proliferation of credit cards has made it all the easier.

From 1970 to 1989, the number of people under 25 with bank cards more than doubled to 29%, according to the Federal Reserve. And from 1989 to 1991, the number of students at four-year colleges with cards increased by more than a third to 65%.

Savvy marketing has helped speed the proliferation. Issuers hire students to sit at tables on campus and encourage fellow collegians to apply for cards. At many universities, simply being enrolled qualifies you for credit.

But educators say many students don’t look past their immediate needs to see the hole they are digging with credit cards.

“Students don’t realize the cost of credit. They look at it as a checking account,” said Dara Duguay, education director for Consumer Credit Counseling Service of Los Angeles. “But I always stress when I go out to talk to them that it is borrowed money.”

Students whose parents can’t afford to help pay for college have traditionally taken time off from school to save. Yet many of these students--along with those who take longer to graduate because of difficulty getting classes--have used credit cards to get by.

For Mike McColl, a 1992 graduate of UC Berkeley, credit problems started when his financial aid ran out after his fifth year of school. It didn’t help that the engine then blew up in his ’68 Cougar. Since being laid off from a part-time job at a software company, McColl said he has struggled to meet payments on his $9,000 in student loans and $11,000 debt on four credit cards.

“It would be fun to do one of those once-in-a-lifetime things that you have the opportunity to do when you graduate,” McColl said. “But my options are limited because I have so much debt.”

Despite the burden credit has placed on them, most don’t know what they would have done without the cards.

James Frusetta, 21, scraped his way through USC, finally succumbing to the credit black hole during his senior year. With only a partial scholarship from his home state of Alaska, Frusetta barely ate during his sophomore year. When he was diagnosed as undernourished, he won a $1,000 emergency scholarship.

With turmoil back home, things didn’t improve much, and Frusetta said he saw no other choice than to charge more than $5,000 to his Gold Mastercard to pay his share of tuition and other expenses during his final semester. An honors student who graduated summa cum laude last May with degrees in international relations and history, Frusetta still hasn’t found a job--though he owes $8,500 on four credit cards and $16,500 in loans.

“When I was in school, everything looked really hopeful,” he said. “Now, with my debts, I’m considering enlisting in the armed forces.”

While not all college students are responsible spenders, some acknowledge that college is tough--especially when they have to meet expenses on their own.

“It is hard for college students to keep up with expenses,” said Stuart Himmelfarb, vice president of Roper College Track, a company that specializes in the college market. “They get all the expenses of starting a household. And then when you overlay the cost of paying off your education, it becomes very prohibitive.”