by Jaclyn Roco
Arts & Entertainment Editor
They stand behind their bright table clothed booths waving banners in the air to get the college students’ attention. “Come and establish your credit,” the banners read. “Make the path to your future look brighter.”
A doubtful student trudges up to the booth and asks what they are trying to advertise.
Why, your future, a saleswoman gushes. Here have a free water bottle and a pen. Sign up with us so that your future credit will be established.
This student was Michelle Renteria, a junior of the University of La Verne, whose future quickly became a nightmare after she signed up with the smiling saleswoman a few years ago.
“That’s how the problems started,” Renteria said. “When I went to junior college I would see them setting out their booth in the quad area. They would say, ‘It’s free to sign up and here are your free gifts.’ Then the credit cards would come and I would have to pay it back. I learned my lesson the hard way.”
Renteria is not alone in this nightmarish experience. According to a 2001 study done by the General Accounting Office, one-fifth of the nation’s college students are carrying credit card debts of more than $10,000.
Ed Mierzwinski, director of the U.S. Public Interest Group consumer program, calls the phenomenon of targeting college students “the campus credit card trap.”
“Students, especially those who fill out credit card applications at campus tables in return for trinkets and candy, run the risk of falling into the campus credit card trap,” Mierzwinski explained in a 1998 press release.
“Students, often without jobs and often facing large student loans and other school debts, should be careful not to make things worse by running up unnecessary, high-cost credit card debt, since they risk ruining their credit records if they fail to pay on time,” he said.
Most college students do not know about this risk, however, and sign up for the credit cards thinking that their records will be improved, not destroyed.
The problem of college students accumulating debt continues to climb.
According to a report by loan corporation Sallie Mae, the average credit card debts among undergraduate college students increased by nearly $1,000 during the past two years.
Based on the Consumer Federation of America’s 1998 report, “Credit Card Debt imposes Huge Costs on Many College Students,” 70 percent of four-year college undergraduates possess at least one credit card. Other studies from the CFA indicate that since 1998, 81 percent of college students have gotten their first card by freshman year.”
The debts that students have been accumulating have come to the point where students under age 25 have become bankrupt at a rate of 50 percent more than in 1990, Barbara O’Neill, Ph.D. for Rutgers University Cooperative Extension in New Jersey, said in her 2002 articles, “College Students and Credit Card Information.”
Due to the rising concern over this issue, the General Accounting Office found in their study that “the problem of credit card debt is especially acute when a student leaves college and has to begin to repay student loans. GAO found that credit card vendors on campus create a ‘carnival atmosphere’ with loud music, games and free gifts without discussing key credit terms such as interest rates or penalties.”
Because this proves to be a large problem, GAO issued legislation known as the “College Student Credit Card protection Act,” which would help address the seriousness of the debt problem.
According to GAO, the legislation would help and limit credit lines to 30 percent of student’s annual income without a co-signer; permit students to receive a starter credit card with a lower credit limit; eliminate the fine print in credit card agreements and solicitations and require parents to agree in writing to increases in the credit limit of cards which they have co-signed.”
Mierzwinski said he had been hoping for some legislation for awhile. He said that PIRG would want Congress to enact legislation, but would condemn any bankruptcy legislation that would be considered on the Senate floor.
He stated that any legislation would help students veer away from the college trap and realize the correct way to establish credit.
“Responsible use of credit cards can help college students build a credit record that will help them get car loans and mortgages after they graduate,” Mierzwinski said. “But it is up to the students to protect themselves from unwise credit card debts, because no one else will.”
Although the legislation is still under consideration, many believe that the republicans will not approve its passing. This will undoubtedly cause students to continue to pay their own way out of the debts they cannot likely afford.
Students like Teddy Ngo, a sophomore at Cal State Northridge, and Marq Sugii, a freshman at Pasadena City College, admitted to having a problem in paying off their accumulating debts. Both said they made a mistake in signing up in their first place.
“I just wanted a credit card,” Ngo said. “I got the credit card application at CSUN. They had booths and came up to me and asked if I wanted to fill it out. I did it and got a free T-shirt. It was an Associate’s Visa Student card.”
Ngo said that although his limit was just $500, he prolonged paying the debt back and found himself stuck with continuous late fees and a higher annual percentage rate. He soon lost his card, but ended up signing up for another student Visa.
“Once you have a credit card, you can’t not have one,” he said. “I came out with nine credit cards after that one went into collections. I still didn’t learn my lesson because I wanted quick cash. I wanted to buy stuff and the credit cards were the easiest way to do it because I thought I could pay it off, a quick loan.
“I’m still paying it off now and this was what, a couple of years ago,” he said.
Sugii said he did not know anything before signing up.
“I think we’re dumb and incompetent and we don’t know,” Sugii said. “We think free money. If you don’t have a job or have means to pay the debt back, I suggest you don’t get a credit card at all.
Marcia Vickers, writer for “Personal Business,” an on-line site, advises college students in her article titled, “A Hard Lesson on Student Credit Cards” on the pitfalls of credit. She tells them to beware of teaser annual percentage rates, late payments, cash advances and any mention of extra credit.
College students, however, still remain prey to cryptic details behind their growing payments. And the question still remains as to why they are the main targets for the creditors.
Rod Pyle, assistant professor of communications, said that the high percentage rates of students with credit cards can be attributed to the students’ naiveté. It is a national trend, he said.
“The creditors are taking advantage of people who are younger, who are yearning for things they can’t have unless they have money,” Pyle said. “It is not a good credit introduction.”
Cass Communications, Inc., an advertising company that supplies newspaper racks at ULV, explained why it allows creditors to advertise alongside other student-orientated ads.
“College students are a very attractive market for most products and services,” they wrote on their on-line site in an article title “Why the College Market?” “They are establishing the purchasing patterns and loyalties that they are likely to follow for life. Attracting their attention now is much more effective than competing for their loyalty as they get older.”
According to Cass, college students have a buying power of over $78 billion annually, over $400 per month for undergraduates and $750 per month for graduates.
O’Neill elaborated, “College students are tomorrow’s newly employed young workers. While most do not earn sizable incomes, their future earnings potential is enormous, making them an attractive target market to creditors.”
Sugii said that colleges everywhere should help fend off solicitors from advertising to college students.
“One of my professors said that our credit card debts were worse than our academic records,” he said. “I would have to agree on that. But until people stop coming to our school, we’ll never be able to say no to them.”
Jaclyn Roco
