Credit-card companies catch college students
■ Students shou Id be wa ry of
the consequences that can
accompany credit-card use
By Jeff DeMoss
For The Emerald
Before you sign up for that shiny
new credit card you saw advertised
in the EMU or down by the book
store, remember the old saying that
there is no free lunch. Or dinner, or
plane ticket or whatever you plan to
buy with your newly acquired plas
tic piece of purchasing power.
In response to the rising cost of tu
ition and life in general, or for what
ever personal reasons, college stu
dents are turning more and more to
credit cards as a means of financing
their higher education.
According to the Consumer Fed
eration of America, a consumer ad
vocacy group, approximately 70
percent of four-year college stu
dents have one or more credit cards.
Of this 70 percent, almost three
fourths have revolving debts of
$2,000 or more. Credit-card compa
nies are well aware of the huge cus
tomer base that college campuses
provide and are marketing cards to
students more aggressively than
ever. According to the CFA, student
debt has tripled since 1990.
This phenomenon has triggered
concern among academics about
the potentially harmful effects of
debt on students’ lives. Dr. Robert D.
Manning, a sociologist at George
town University and conductor of a
recent study of credit-card use
among students, believes that ex
cessive credit-card use by students
has created unforeseen social con
sequences that both college admin
istrators and the credit-card indus
try purposely ignore.
Manning’s study produced a long
list of negative effects that he attrib
utes to student debt, including anxi
ety, depression, damaged personal
relationships and lower grades be
cause of the need for students to sac
rifice study time in order to work off
their debts.
Good credit is an important asset
for students as they begin their pro
fessional careers. Without good
credit, it can be difficult or impossi
ble to obtain a mortgage, car loan or
other major purchase, and some em
ployers will not hire an individual
with scars on his or her credit histo
ry. Students can and do use credit
cards responsibly by keeping track
of their finances and making regu
lar payments. “Most of them are ex
tremely responsible and handle
credit cards as well or better than
most adults,” said Brian Dalphon, a
spokesman for MBNA Corp., the
largest issuer of student credit cards
in the country.
Manning, however, believes that
new college students are often un
able to see the long-term conse
quences of their immediate actions
and often use new credit cards im
pulsively. Some students echo this
sentiment.
“My first card felt like instant
freedom in my hand,” said Phil Ger
hards, a senior art history major,
who “maxed out” his first credit
card in a few weeks. Gerhards man
aged to pay off his card before doing
permanent damage to his credit rat
ing, but many thousands of students
don’t realize their mistakes in time.
In an extreme case in 1997, the par
ents of University of Central Okla
homa freshman Mitzi Pool attrib
uted her suicide to problems with
debt.
Manning blames the credit-card
industry for its failure to warn stu
dents of the consequences of going
into debt and for its eagerness to
give essentially unsecured
loans to teenagers who lack
experience in their econom
ic affairs.
Despite Manning’s opin
ions, which consumer J
protection agencies such
as the CFA largely share,
college campuses contin
ue to serve as a lucrative
market for credit-card
companies, which are
increasing their pres
ence on campuses na
tionwide.
Many universities of
fer “affinity” cards —
credit cards with a uni
versity logo in which a
small percentage of
each purchase made
with the card is donat
ed to the university (the
University has such an
agreement with VISA).
First USA, another major
college card issuer, recently do
nated $16 million to the University
of Tennessee for exclusive rights to
market their card on the UT cam
pus. MBNA has donated big bucks
to several schools, including $2 mil
lion to Manning’s own Georgetown.
As a student, the best defense
against out-of-control debt and ag
gressive marketing is always
knowledge; learn how to
manage your debt
and under
stand
t h e
terms of a
credit card agreement before sign
ing it. Helpful information can be
found at www.consumerfed.org
and www.studentcredit.com.
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