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No More Credit Cards for College Students

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November is the month that many high school seniors are thinking about what they’ll do after graduation, applying for college, and collecting information to complete the Financial Application for Federal Student Aid that’s due January 1. This month, my column will be devoted to answering personal finance questions related to families with high school seniors.

College students were being targeted by credit card companies on college campuses and students were graduating with more than $3,000 in credit card debt. President Obama decided to do something about it so he created the Credit Card Accountability, Responsibility and Disclosure Act of 2009, also known as the Credit CARD Act.

According to a Sallie Mae research study titled “How Undergraduate Students Use Credit Cards: Sallie Mae's National Study of Usage Rates and Trends” the average undergrad carried $3,173 in credit card debt alone. That is the largest amount of credit card debt by college students since the study began. The average college senior graduated with $4,100 in credit card debt. That’s up from 41% when the same study was conducted in 2004. That might not seem like a lot until you consider that the credit card debt is on top of the student loan debt they carry. Things were definitely getting worse until the CARD Act went into effect back in 2009.

New Rules
The CARD Act created many positive changes for Americans and college students are no exception. Now, if you are younger than twenty-one years old you will not be able to get a credit card unless you can prove that you have sufficient income to pay back any debts or you can get a co-signer.

Credit card issuers used to play very fast and loose with college students. They would sit at tables on campus and offer free gifts to students to encourage them to apply. Many students didn’t understand how their credit scores were being affected even if they weren’t approved for a card. Students didn’t understand how interest was calculated. They didn’t understand how paying the minimum required payment would lock them into debt for years.

Good or Bad
Of course, there is good and bad in every decision. Some argue that students may not have access to a vital source of supplemental income during college years. Others applaud the new rules as a way to help young Americans stay clear of the mire of debt that many older Americans are already ensnared in.

Do you agree or disagree with the new credit card rules for college students?

Shay Olivarria is the most dynamic financial education speaker working today. She has written three books on personal finance, including “10 Things College Students Need to Know About Money”. She's been quoted on Bankrate.com, FoxBusiness.com, and The Credit Union Times, among others. To schedule Shay to speak at your event or to find out more about her work, visit her at www.BiggerThanYourBlock.com.

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