Credit co. must find new ways to leach onto students
At college campuses around the country, a fall ritual as familiar as the football tailgate party is about to disappear. The on-campus credit card marketing, characterized by free pizzas and T-shirts for every completed application, is enjoying its last hurrah before a new federal law kicks in next year.
Credit card issuers in recent years routinely awarded cards to students with no income and no co-signer. Many colleges and universities joined the credit card game, allowing school mascots to be emblazoned across cards marketed to students and alumni.
Some colleges provide credit card companies with names and addresses of students and alumni. In exchange they can earn lucrative royalties based on the number of sign-ups and the volume of charges.
Consumer advocates say the reining in of student credit card sales can't come soon enough. In a study by Sallie Mae, the student loan organization, college students who had applied for student loans had an average of 4.6 credit cards in the spring of 2008, with the average senior graduating with $4,100 in credit card debt.
College students have been a key target of the credit card industry.
In February, a host of changes will hit campus. The law will:
Allow consumers under 21 to get credit cards only if a parent or other adult co-signs or if they prove they have the independent means to repay credit card debt.
Require disclosure of agreements that authorize collegiate affinity cards, including the details on royalty payments and mailing lists. Prohibit card issuers from offering freebies like food or trinkets when marketing on campus.
Stop prescreened credit card offers for consumers under 21 and ban credit limit increases without permission of a parent or other co-signer.
While many credit card companies have already scaled back aggressive on-campus marketing, consumer advocates say they will be monitoring colleges this fall.
The new reforms are aimed at keeping students from accumulating more credit card debt than they can handle. The changes are likely to make it more difficult for consumers under 21 to get credit cards.
J.D. says "Beware! Credit Card companies will find new ways to get their bloody talons into the pocket books of these young and innocent college students."
