http://www.nytimes.com/2008/10/18/opinion/18sat2.html
Editorial: The College Credit Card Trap
Published: October 17, 2008
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.
