Credit card debt on college campuses: causes, consequences, and solutions

College Student Journal, Sept, 2002 by Jill M. Norvilitis, Phillip Santa Maria

Education and awareness alone may not be enough to reduce the problem of student credit card debt. Changing the process by which students obtain credit cards on campus is another important component. Norvilitis and colleagues (in press) found that two-thirds of students believe that the college supports credit card companies who solicit students in the union. Further, a quarter of students incorrectly believe that the college screens credit card companies who solicit in the student union. PIRG (1998) recommends that colleges should alter the way students apply for cards on campus. For example, they recommend that students not be allowed to receive free gifts for applying until after they have read a credit card educational brochure. Another possibility would be limiting the number of tables allowed on campus. On this campus, credit card companies are allowed to solicit only one day per week and only if sponsored by a student group. Still other potential changes would involve changing how fees are paid to colleges or student organizations. For example, if student groups received a flat fee for sponsoring a table rather than an amount per completed application, there might be less pressure on students to complete applications (PIRG, 1998).

While colleges are in a position to teach credit card savvy to students, that task is not the sole responsibility of--nor should it begin with--the institution of higher education. Ideally, money management techniques would be first taught in the home with relevant programming implemented at the elementary and high school levels. The issue at hand is a societal problem, which requires a concerted effort by parents, educators, elected officials et al.

It is understood that, although parents hold the primary responsibility for teaching their children good spending and effective saving habits, this is not a perfect world and such is not always the case. Following suit, relevant programming may be available, fundable, or considered important enough at the K-12 levels of education.

College students, in all of their unperceived naivete, fall prey to the lure of the good life that is dangled before them by credit card solicitors on campus and compounded by peer pressure to spend. Everyone knows that a college education is expensive, that spring break is a necessity, that a good car is the key to popularity, and that day to day living costs money. Television programs, too, lead young people to believe that they can live a lifestyle where money is no object and spending has no serious consequences (Shenk, 1997). Unfortunately, this is a "buy now, pay later" society where credit flows freely in the direction of young people who have very little experience with handling finances. It is also no secret that college students are a select group that is old enough for credit but has not yet established brand loyalty.

Colleges are not the only institution taking note. Due to parental concern for a growing problem that has been brought to her attention, Rep. Louise M. Slaughter (D, Rochester, NY), has introduced the College Student Credit Card Protection Act. This legislation seeks to restrict the lending practices of banks with regard to students. Companies would have to determine student ability to pay off a balance before giving approval to an application. Student credit lines would be limited to 20 percent of their annual income without a cosigner. Rep. Slaughter is also seeking lower credit limits with prompt payment as an incentive for increases. Small print relative to hidden fees and written parental notification of credit line increases would be encompassed by another provision. In addition, Rep. Slaughter commissioned a study by the General Accounting Office (GAO), which is the investigative arm of Congress. This report, released in June, 2001, reported on the credit card solicitation practices of colleges and universities and found that there is no uniform set of practices among colleges.