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 signed 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.”
Of course every campaign has to have a slogan. In this case it’s a play on VISA, “FEESA. Free Gifts Now. Huge Fees Later.”
U.S. PIRG has been joined in this campaign by the American Council on Education, the National Association of College and University Business Officers and NASPA, Student Affairs Administrators in Higher Education.
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:
A ban on offering any gifts when marketing credit cards. The prohibition would include anything of value, including food, clothing, sports equipment, travel vouchers or coupons.
A prohibition of any campus employee, student group or campus department from accepting financial support or other goods and services from credit card banks, issuers and vendors in exchange for allowing them to market cards to students.
A ban on the sale of any student lists to credit card companies.
The campaign isn’t an effort to ban access to credit cards by students, but rather create more informed consumers, said Gwen Dungy, executive director of NASPA.
“We are trying to use colleges as change agents,” Mierzwinski said. “And maybe some will think twice and not get cards.”
I don’t think any college student needs a credit card. If they 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 have two nieces in college, one a senior at Spelman College in Atlanta and the other a sophomore at Bowie State University in Maryland.
Neither of them has gotten a credit card. They’ve both been able to manage just fine without leaning on plastic in lean times. That’s a valuable lesson.
The senior at Spelman even spent a recent semester in South Africa.
Some might have advised her — in case of an emergency — to get a credit card. No need.
When she needed money, it was simply deposited into her bank account and she used her debit card.
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.
&Copy; Washington Post Writers Group
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