New College Credit Card Legislation on the Horizon
Posted by: Henry Baum | Mar 28,2008
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A new study about college credit card marketing has added fuel to the fire that credit card companies need to cut down on marketing to college students. Like other charged issues, marketing credit card offers comes down to something akin to federal rights versus state’s rights. Some lawmakers argue that credit card marketing should be left to colleges individually, while others say that there should be new federal standards governing how credit cards are marketed on campus.
The Findings of the Credit Card StudyThe credit card study revealed that college students are marketed for credit cards more often than other consumers. While much of the criticism about college credit card marketing is targeted at on-campus marketing, college students are contacted by credit card companies in other ways as well. The study shows that college students receive four phone calls and five mail offers a month.
However, it is on-campus marketing that has come under the most fire. One of the major reasons for the controversy is that college administrations receive money from credit card companies for the right to market on campus. Consider it a form of advertising revenue. A more sinister way to look at that is college administrations are profiting from their own students being taken advantage of by predatory credit card companies.
Problems with Student DebtThe term “predatory” is thrown around a lot, but it does have some basis. College students are offered cards with high interest rates and, on average, are both more frivolous with their spending and less responsible with payments, raising that rate even higher. In short, college students are a virtual goldmine for credit card companies. College students are averaging $2000 in credit card debt upon graduation. Combined with student loan debt, this can make for a very difficult situation post-graduation.
So new legislation could come on the books limiting the number of credit card companies that can market on college campuses. Another proposal is to require colleges to include a financial management course if the college takes money for on-campus credit card marketing. The problem isn’t necessarily that college students sign up for credit cards, but how those students use credit once they have an account.
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