Add this to the list of the country’s financial woes: Credit card companies are aggressively targeting college students, many of whom are naïve about money matters and vulnerable to predatory offers that can get them permanently mired in debt.
According to an eye-opening
survey by the United States Public Interest Research Group, or U.S.
PIRG, which is an advocacy organization, some students reported
receiving hundreds of credit card offers in a year. The report also
described how companies lure cash-starved students with gifts of
clothing and free food. In one flagrant case in Ohio, students who
showed up for the food were required to fill out credit card
applications before they could eat.
A half-dozen states have
placed restrictions on how credit cards can be marketed at public
colleges. Congress is considering sensible bills that would restrict
the amount of credit and the number of cards that students could be
offered. Lawmakers should also focus on the lucrative and often secret
deals that universities and their alumni associations regularly cut
with credit card companies.
Those deals — which resemble the
now outlawed student loan kickback deals — often grant companies the
exclusive right to market to a college’s students. In some cases, the
colleges get a cut of what the students spend, which makes the school a
partner in the plundering of young peoples’ meager assets.
Congress must insist that these deals be made public and universities
and alumni groups must insist that students be given fair deals from
credit card companies.
With financing from the Ford
Foundation, U.S. PIRG has begun a national campaign urging schools to
adopt some common-sense principles that would help shield students from
credit card marketers and financial ruin.
The group calls on
universities to stop selling the names and contact information of
currently enrolled students to credit card marketers. It also says that
schools should ban marketers from using gifts to entice students to
sign up for credit cards, and it urges schools to do more to educate
students on managing debt responsibly.
Most importantly, the
group calls on schools that still decide to cut deals to only do
business with credit card companies that steer clear of commonly used
but unscrupulous credit card terms that take advantage of students.
That means an end to hidden fees or unreasonable penalties, including
universal default, under which interest rates go up when the customer
fails to pay a bill not related to the credit card account.
Schools need to reform their credit card practices. If they don’t move quickly, lawmakers must do it for them.
