ANNAPOLIS – Some college students, unaccustomed to managing credit cards, find themselves racking up debt, so a Harford County legislator is trying to protect them from their own financial pitfalls.
Delegate Charles R. Boutin, R-Harford, is the chief sponsor of a bill to cap the credit limit extended to college students. The bill also would stop credit card issuers from bumping up credit extended to students.
The House Commerce and Government Matters Committee will hear testimony on the bill today.
The intense marketing to college students was one impetus for the bill, said Boutin.
Each year, bank representatives flood college campuses, courting students with offers of free trinkets in exchange for their business. Students receive key chains, plastic cups and T-shirts emblazoned with bank logos, when they open a checking account or complete a credit card application.
The credit accounts boast low interest rates, but those seductive introductory rates don’t remain low for long. The 9 percent rates jump to 24 percent with one late payment, said Boutin, who has three sons recently graduated from college.
“You’re going to have to have some control measures,” said Boutin. “If you can’t stop the solicitation, at least you can control some of the negative impact and set up some regulations.”
The U.S. Public Interest Research Group recommends college and universities prohibit credit card companies from offering free souvenirs to students for filling out applications.
The University of Maryland, College Park allows only Chevy Chase Bank to set up tables on campus because it has a branch in the student union. And the bank may only offer credit card applications along with student checking account applications.
“We do not allow anyone to come on campus and sell credit cards,” said George Cathcart, director of university relations.
The university still has problems with people walking onto campus and setting up tables to solicit without permission, especially when school starts each fall.
“They’ll set up just about anyplace, like the parking lot,” said Steve Adams, assistant director of the university’s Stamp Student Union. “We ask them to leave once we get a complaint.”
According to Boutin, college students are ill-equipped and especially vulnerable to credit card companies and their offers of instant credit and low introductory rates.
His bill would limit the credit issued to any university student under age 23 unless their parents are co-signers.
“I think it’s legitimate to protect them for at least a few years,” he said.
Boutin also worries students will find themselves saddled with credit card and student loan debt after graduation and unable to pay the bills. With their credit ratings in jeopardy, the graduates will find it difficult to buy a car or finance a mortgage.
A 1998 U.S. Public Interest Research Group survey found students who got credit cards from on-campus tables carried higher unpaid balances than students who got their cards elsewhere. The bill would set a cap based on the student’s annual gross income, and students without an annual income could not be extended credit. There is no cap for accounts co-signed by a parent, but the parent must approve any credit increases in writing. – 30 – CNS-1-30-01