WASHINGTON – 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.”