Bill Aims to Ease Student Credit Woes

U.S. Rep. Louise Slaughter, D-N.Y., introduced the bill to amend the Consumer Credit Protection Act.

College offers many students their first taste of financial freedom -- but with that responsibility comes the risk of overstepping set limits and tumbling into debt.

As the school year begins and students become the target of many credit card solicitors, UNC officials are warning students to examine any credit card applications before signing.

According to a study conducted in June by the U.S. General Accounting Office, 20 percent of the nation's college students owe more than $10,000 for credit card charges.

The study also found that about 33 percent of students had credit cards before entering college. An additional 46 percent applied for and received cards during their first year.

In an attempt to help students avoid being taken advantage of by credit card companies, Rep. Louise Slaughter, D-N.Y., introduced a bill earlier this year designed to amend the Consumer Credit Protection Act. The act was originally put in place to prevent credit card companies from taking advantage of full-time, traditional-aged college students.

Slaughter's legislation proposes that credit limits for college students not exceed 20 percent of the student's gross income or the total of $500 multiplied by the number of years since the account was opened. The resolution is not yet scheduled for a vote.

Slaughter's press secretary Steve Adamske said the congresswoman proposed the bill because she is concerned about credit card debt in addition to the loan debt many students incur. "(Slaughter) has a huge interest in what's going on with today's college students," he said. "She believes credit card companies target college students because of vulnerability."

Adamske added that he expects the bill to be contested because it goes against the interest of banks and credit card companies. "We tried (to pass it) as part of a bankruptcy bill, but it didn't work. It's going to be a tough sell."

Credit card companies often target students because many have some income and are eager to develop a credit history.

Out of the six credit card companies GAO interviewed for its study, six solicited students through the Internet, five by direct mail and three by setting up tables on college campuses.

But the UNC Facilities Use Policy prohibits credit card companies from setting up tables on campus. UNC Associate University Council Mary Sechriest said it is the University's position to not allow any commercial solicitation on campus.

"Sometimes people go places where they're not supposed to be, but if we find out about it we don't allow it," she said.

Carol Badgett, a staff attorney with UNC Student Legal Services, said the best way to avoid credit problems is to pay attention to the fine print on credit applications.

"Sometimes your local bank or credit union offers a really good rate," she said. "(There is) a lot of glitz and glamour with many credit companies. You may be offered some very good benefits, (but they are) short-lived."

"It would be a very good idea to shop around for credit cards," she added. "Many students get a number of credit cards and max out on each one. It's easy to sort of get into a bind on one and then get another."

The State & National Editor can be reached at stntdesk@unc.edu.