Maryland students and a state delegate
applauded the release of a nationwide survey that recommends broad
restrictions on credit card marketing to college students.
Their
support came during a conference call Thursday to discuss "The Campus
Credit Trap." The report by the U.S. Public Interest Research Group
highlighted the many approaches used to target students and recommended
major reform.
The almost two-thirds of college students who sign up for one or more
credit cards often pay high fees, suffer delinquencies or lower their
credit scores.
College
students overwhelmingly supported measures like marketing cards with
fair terms (74 percent) and banning the distribution of student
information to credit card companies (67 percent) that heavily target
them.
"What they're doing is aggressively marketing
students to sign up for many cards because they give them free gifts,"
said Maryland Delegate Susan Krebs, R-Carroll, who introduced a bill to
limit such activity.
When college students sign up for several cards, they often damage credit scores, said Krebs.
"When
you're a young person and you're getting out of school, you don't have
the credit history, you don't have the amount of time in a job, you
don't have homeownership, you don't have all the other things to
balance out having all these credit cards," said Krebs, whose awareness
of the issue rose with the recent mortgage loan crisis. "The mere fact
that you have a bunch of credit cards can hurt your credit score."
Krebs
is sponsoring HB 1210, which originally prohibited the use of gifts in
marketing credit cards and blocked the sale or provision of student
information to companies - two of the six PIRG report recommendations.
The revised House bill -- which passed unanimously and is now in the
Maryland Senate Finance Committee -- now calls for public colleges to
develop policies and educate students on credit card marketing.
"The specifics have been taken out," she said.
"We've put the onus back on the university system to address this issue."
Krebs
is sending colleges the report, which also calls for an end to group
sponsorship, an increase in financial education, discouraging unfair
credit card terms and controlling passive marketing techniques. She
expects universities to develop "comprehensive" policies on marketing
credit cards.
Already, Towson University and Frostburg
State University have eliminated credit card marketing on campus, and
the University of Maryland, College Park doesn't allow solicitation
from credit card companies on campus except at sporting events.
But credit card companies also promote cards in facilities near campus, and mail and call college students.
And
a newer mechanism has become the most popular marketing technique on
campus, said University of Maryland, College Park, Student Body
President Andrew Friedson - "students hawking credit cards."
"Organizations
. . . come to student groups and use credit cards signups as a
fund-raiser," said Friedson. "What that does is it exploits peer
pressure and the trust that you have in your fellow student."
Friedson
says the most important solution is education at college and
kindergarten through 12th-grade learning on financial literacy that
goes beyond balancing a checkbook.
"What's more important is learning the risks involved in credit," he said.
Credit
card companies are no longer directly responsible for limiting
marketing as the prescriptive bill language has been removed. But Krebs
is looking to colleges to implement the recommended policies or face
new laws.
"If they don't adequately take care of it," she warned. "We'll be back."
