Many college students graduate with a large amount of student loan debt. But a less spoken evil, credit card debt, can still be a heavy burden for many college students who are still in school. The average undergraduate carries a credit card balance of $3,173, according to Statistic Brain.
Students can enter college at 18 years old, the first year of official adulthood. While they are old enough to live on their own and vote, many don’t understand how to properly manage their finances. And, credit card companies swarm college campuses, offering credit cards to young students. These often come with high interest rates due to the students’ limited credit history.
In Illinois, the state government wants to intervene on college campuses. A bill preventing credit card marketing at universities and community colleges has passed the House committee.
While the bill passed, some committee members questioned if the bill was necessary.
“I’ve not been able to find any demonstrable numbers, research or data that says that the acts that we currently have are ineffective,” said state Democratic Rep. Carol Ammons of Urbana.
But the bill’s co-sponsor, state Democratic Rep. Sue Scherer of Decatur, said the legislation aims to head off marketing tactics that draw students to sign up for credit cards and subsequently get into big debt, according to the State Journal Registrar.
Lobbyists from the banking industry oppose the bill, claiming it is ineffective and recommend that students instead should be educated on personal finance. The University of Illinois System and the Illinois Community College Board are not taking a position in the debate.
CARD Act Protections for Students Under 21
Aside from the Illinois bill, the Credit CARD Act of 2009 offers federal protections for consumers under age 21. It bars credit card marketers on or near college campuses from using incentives to lure students to apply for a credit card.
Furthermore, since the CARD Act went into effect in 2010, the rules have helped make it more difficult for someone under age 21 to get a credit card. The student must provide proof in an application that they have the financial means (from a job or otherwise) to pay their credit card bill, or they must have a cosigner who is age 21 or older and can prove they have adequate income.
Nevertheless, it’s important for students to learn how to responsibly use their credit cards so they aren’t stuck paying for their college careers – and at high interest rates – for many more years to come.
Author: Mike Brown
In his role at LendEDU, Mike uses data, usually from surveys and publicly-available resources, to identify emerging personal finance trends and tell unique stories. Mike’s work, featured in major outlets like The Wall Street Journal and The Washington Post, provides consumers with a personal finance measuring stick and can help them make informed finance decisions.