Credit Reforms Reach Campuses

Washington Post
August 27, 2010
Mui, Ylan Q.
P. A14

The new credit card reform legislation is aimed at protecting college students, among other vulnerable segments of the population, from credit traps. It bans card issuers from giving cards to people younger than 21 unless an adult co-signs or the student can show an independent source of income. It also prohibits companies from offering students freebies in exchange for signing up for a card on campus or at school events, and colleges and university groups must disclose any partnerships they have with card issuers. Young people are an attractive market for card issuers hoping to expand -- 42 percent of college students have a credit card and graduated with an average debt of $4,100 in 2008. Lawmakers and consumer advocate groups chastised issuers for inappropriately marketing the cards to students by holding giveaways on campus, searching alumni association databases, and negotiating lucrative partnerships to provide university-branded cards. Several issuers have cut back on their promotions, including ceasing their use of student mailing lists and no longer setting up marketing tables at colleges. Another provision in the new law requires card issuers to submit any contracts they have with collegiate groups to the Federal Reserve, which will then compile a report detailing the nature of the relationship. Consumer advocates hope this legislation will bring increased transparency.
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