It's time to end credit card offers on college campuses
By Michelle Singletary
WASHINGTON — Ed Mierzwinski is trying to get the word out to college students that the free T-shirt or teddy bear or sub sandwich they accept in exchange for signing up for a credit card could end up costing them a lot of financial heartache.
For years now, lenders have set up tables on college campuses offering free stuff to entice students into signing up for credit. The companies know that if they get these young people early, they will likely capture a customer for a long time.
Many schools have lucrative affinity deals with credit card companies in which they provide contact lists of students or allow sidewalk-marketing by the credit pushers. It's an insidious relationship that is justified because the schools get needed funds or officials insist that the cards help students build a credit history.
What many students end up building is a lot of debt.
"They rely on the fact that students are vulnerable," said Mierzwinski, the consumer program director for U.S. Public Interest Research Group.
But now many college students will be seeing new tables on their campuses, marketing a different message. With a grant from the Ford Foundation, U.S. PIRG is heading a coalition that is staging a national counter-credit card marketing campaign. They are starting on 40 college campuses across the country.
Instead of a credit card application, students will be handed literature warning them about the fees and terms of certain credit cards. They'll still get free items, including lollipops that say, "Don't be a sucker."
Consumer and higher education groups have become increasingly concerned that college students, many of whom do not have a job or steady income, are getting credit cards without fully understanding the credit terms.
In a 2004 study of credit card usage by undergraduates, 56 percent of freshmen reported that they had obtained their first card at the age of 18. The student loan lender Nellie Mae, which conducted the study, said that as students progress through school, their credit card usage swells.
By the time they reach their senior year, 56 percent of students carry four or more cards, with an average balance of $2,864. Of course, some have much more than that.
The counter-marketing campaign includes a Web site (www.truthaboutcredit.org), planned publication of research reports on credit card marketing practices and an appeal to colleges to adopt the following:
I don't think any college student needs a credit card. If students don't have the money to pay for school supplies, textbooks or food (the top reasons they use credit), what are they going to do when the bill comes due?
Oh yes, they'll do what many seasoned cardholders do. They will roll over their balances to the next month and dig themselves deeper into debt.
Not surprisingly in the Nellie Mae report, only 21 percent of undergraduates with credit cards reported that they paid off all cards each month, and 11 percent said they made less than the minimum required payment each month.
I hope this campaign does have a major impact. At the very least, every college ought to sign on to ban the giveaways by the credit card companies. The administrators of these schools shouldn't let their students be taken down the path of plastic bondage lured by a T-shirt giveaway.
