Credit Cards & College Students (Full Version)

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Ps103 -> Credit Cards & College Students (5/20/2009 1:08:25 PM)

On the news yesterday, they said one of the credit card company reforms was going to be that cc companies could no longer give credit cards to college students unless they had a parent co-signing on it or a legitimate proof that the student could repay (ie, a job).

The aggressive marketing of credit cards to college students has been a major peeve of mine for a long time, particularly after I heard a cc representative defend the practice by saying "we believe the kids when they put down that they receive $X from their parents or from student loans," and "parents Will normally step in and pay the bill, rather than leave their children with a debt they cannot pay." Colleges love having the money the companies pay them for access to their students, and do nothing to teach the students about responsible use of credit, or of compounding interest.

A study by Sallie Mae found that undergraduates carry a balance of $3173 and graduating seniors carry a balance of $4100 on average. This is an increase of over 40% in five years. And in addition to student loans.

And, not to change the topic because it is related, but student loans seem to be given now due to one's status as a student--not to pay for tuition and books. I have heard students say they financed their Spring Break trip with student loans, or use the loans for any kind of expense except school expenses.

It seems to me that the current system not only saddles college students with debt, but actually encourages it and leads them to believe that such debt is "normal" and "necessary."

What do you think of this? Will limiting the access of credit cards to college students be a positive move?

If you are (or recently were) a college student, did you graduate with debt, either credit cards or student loans? If you had student loans, was the money you received more than what your tuition and books cost?

If you are a parent of a student and you found out your child had a credit card (or several) with balances they could not pay and wanted you to pay it, how would you react?



Miss Giggles -> RE: Credit Cards & College Students (5/20/2009 1:26:20 PM)

They are over 18. They shouldn't need a cosigner. However I think they should require proof of income. I believe in personal responsibility - not every kid that goes to college is irresponsible with money. You can also go to school and take out the max amount of loans and blow that money too - and just be paying on them for the rest of your life. Or not be able to get a job that pays more than 10.00 an hour. The whole college thing is a pet peeve of mine since they are raising the tuition so high every year and not all jobs are great paying even if they require a degree (example social work, police officers, etc). So many people are graduating with 60,000 to 100,000 in debt. A few didn't even finish their degrees.

P.S my mom did cosign me for a first credit card.. but she said she'd kill me if i screwed up her credit and I believed her [:D]. I did not have any cc debt until I went to graduate school and moved out on my own and it started to add up.



stellaluna -> RE: Credit Cards & College Students (5/20/2009 1:29:22 PM)

I don't think it's a good idea. I think it's okay to put some restrictions on marketing on public college campuses, but once a person is 18 I don't think they should be required to have a co-signer for a credit card or a student loan.



blessedinnyc -> RE: Credit Cards & College Students (5/20/2009 2:14:51 PM)

quote:

ORIGINAL: Ps103
If you are (or recently were) a college student, did you graduate with debt, either credit cards or student loans? If you had student loans, was the money you received more than what your tuition and books cost?

I graduated without any credit card debt, but I showed up in New York with about two weeks' pay of credit card debt. Moving isn't cheap, and I needed to put some expenses on my credit card to pay for everthing. I paid the balance down in six weeks and within six months, I had six weeks of emergency savings and had saved about 6% of my salary for retirement on top of that.

quote:

If you are a parent of a student and you found out your child had a credit card (or several) with balances they could not pay and wanted you to pay it, how would you react?

Tell them to pay it if they can or otherwise declare BK. Not my problem. They're 18.



Coffee_Drinker -> RE: Credit Cards & College Students (5/20/2009 3:11:54 PM)

quote:

ORIGINAL: Miss Giggles

They are over 18. They shouldn't need a cosigner. However I think they should require proof of income. I believe in personal responsibility - not every kid that goes to college is irresponsible with money. You can also go to school and take out the max amount of loans and blow that money too - and just be paying on them for the rest of your life. Or not be able to get a job that pays more than 10.00 an hour. The whole college thing is a pet peeve of mine since they are raising the tuition so high every year and not all jobs are great paying even if they require a degree (example social work, police officers, etc). So many people are graduating with 60,000 to 100,000 in debt. A few didn't even finish their degrees.


A tough topic that could definitely raise my ire. Agreed, these kids are over 18 and do NOT need a cosigner. However, this is not the first time this kind of legislation has gone before the State and Federal Government. Personally, I think it's a good idea (if you want the whole truth - I believe Credit Cards should be outlawed entirely. But, for College students, without some type of income that shows they can handle the charges then no way. Way to many of these College kids get these preapproved applications in the mail and get instant credit - might as well call it "party cash." Next thing you know they have maxed out the card, can't pay it, most probably ignore it hoping it'll just go away, it goes to collections, collections calls the parents 'cause that's the "permanent" address and phone number the kids used.

These CC companies know that Mom & Dad ain't going to let their kid ruin his or her credit before they even have a chance to graduate so the parent's "generally" end up paying the bill.

Even "proof of income" won't work. The kid probably delivers pizza, or waits tables. Those jobs don't pay squat and interfere with their "life."

I'm also upset with the entire "College thing." It has become nothing more than "big business" in my book. These kids spend 4-6 years of their lives getting a college degree because that's what's supposed to be done to "better themselves" in life so they go in debt $50-$100k and spend the rest of their lives paying off the education they received.



Mollymouser -> RE: Credit Cards & College Students (5/20/2009 11:46:32 PM)

quote:

ORIGINAL: Ps103

If you had student loans, was the money you received more than what your tuition and books cost?


Yes, my law student loans also covered my living expenses (which were very high since I was living in an extremely high cost of living area -- San Francisco.) We were also prohibited from working our first year of school, so we really needed to come up with living expenses somehow.

After three years of full-time law school, I graduated with $75,000 in student loans.... all from grad school. (I worked full-time during my undergraduate degrees and didn't take out student loans until I moved to San Francisco for law school.)



BlueAdept -> RE: Credit Cards & College Students (5/22/2009 1:17:25 PM)

While I don't think it is a good idea to issue credit cards to students, I also think they "need" to begin building their credit file. If they are a student living in a dorm room, where do they build that?

I think they need to set very small, under 500 dollars for the credit limit. I think they should not require parental co-signers, and they should carry a very high interest rate (25%). I also think they need to disclose clearly the terms and the college should be disclosing what payment they are getting from the bank issueing the cards.

I had a credit card while at college (I was 23) and worked part time. I put myself through school, and worked part/full time while doing it. So to just issue some rule and expect banks/credit card issuers to be able to follow it, that is bad. How do you figure out if this 19 year old is a student and that one is not? Do you not issue ANY cards to 19 year olds? If that is the case, when do you issue a card? 20, 21, 25?



humbleinspirit -> RE: Credit Cards & College Students (5/23/2009 12:48:10 PM)

I am very glad that they passed new rules on this. I do not think that is fair that kids going to college should be given cards even if they cannot prove the ability to pay back. This should be much better for the overall financial status of of the credit card/banking industry as well.



Ps103 -> RE: Credit Cards & College Students (5/23/2009 1:07:08 PM)

I do not see the benefit of giving a credit card to someone who has never had a job, regardless of their age, and regardless of whether or not they have a co-signer. Student loans and allowances from mommy and daddy shouldn't count.

And I am not sure that establishing credit before one is credit worthy is something anyone needs, either.



humbleinspirit -> RE: Credit Cards & College Students (5/23/2009 1:08:49 PM)

I had a job for 2 years when I was only 16. I was fortunate to get a small credit line from a local retail store. I do not see why it should be easier for them at all.



Tinkerbell_ -> RE: Credit Cards & College Students (5/26/2009 4:04:37 PM)

quote:

ORIGINAL: BlueAdept

While I don't think it is a good idea to issue credit cards to students, I also think they "need" to begin building their credit file. If they are a student living in a dorm room, where do they build that?

I think they need to set very small, under 500 dollars for the credit limit. I think they should not require parental co-signers, and they should carry a very high interest rate (25%). I also think they need to disclose clearly the terms and the college should be disclosing what payment they are getting from the bank issueing the cards.

I had a credit card while at college (I was 23) and worked part time. I put myself through school, and worked part/full time while doing it. So to just issue some rule and expect banks/credit card issuers to be able to follow it, that is bad. How do you figure out if this 19 year old is a student and that one is not? Do you not issue ANY cards to 19 year olds? If that is the case, when do you issue a card? 20, 21, 25?

I don't understand why anyone would need to "build" credit. There are ways to purchase things without credit, even houses and cars. Credit is why our nation is hurting financially now. People take out loans for things they can't afford and then bam! No money to pay for it.



SaraChristine -> RE: Credit Cards & College Students (5/29/2009 11:20:44 PM)

I'm a college student.
I have two credit cards (one is currently paid off).
So far I have no student loans, but next year I will have to get some.

A lot of people I know use their extra money from loans for other things (a lap top, and a digital camera for instance).
If I have any money left over it's going to a savings account where it's going to sit until I have to start paying off my loans.


I know my parents can't/won't bail me out if I get myself in debt, so I keep track of my finances as best as I can.



rebakahblam -> RE: Credit Cards & College Students (6/3/2009 3:15:26 AM)

First, I'd like to clarify the law states that credit card companies cannot give people under age 21 credit without a cosigner or proof of a job - while most college students are in that age bracket it's just young people in general - more semantics I suppose but I felt like I'd add that bit in.

Now onto your questions:

quote:

What do you think of this? Will limiting the access of credit cards to college students be a positive move?

I don't think it's the access that is the biggest problem - it's the lack of education on how the credit system works. The more people have education about how to build a good credit score and how to keep it, the more responsible they will be with credit. At least that's been the case with me. I took it upon myself to learn about building credit and feel very proud of the score I have.

Limiting the access will help, but we need to increase the access to education of responsible financial practices. I have seen far too many parents continue to bail students out through college and then wonder why the kids fall flat on their faces after they graduate.

quote:

If you are (or recently were) a college student, did you graduate with debt, either credit cards or student loans? If you had student loans, was the money you received more than what your tuition and books cost?


I graduated 3 weeks ago and will be attending grad school in the fall. I did graduate with debt from student loans. I have about $30k worth of debt..but I see it as an investment. I worked hard to earn my scholarships and graduate with a double major in only three years. I see it as a steal - a $160k education for only $30k.

I currently have about $1k worth of credit card debt. That is what I racked up this last year after paying off my laptop. I was an RA and was not allowed to really work so the debt is from living expenses. The bulk of it is from new tires, a new muffler system, and my glasses. I don't use my credit for pleasure, I use it as a back-up. I pay it back as soon as I can. I am currently working a full time job in addition to my full time internship to begin saving for moving expenses and paying this card off.

My student loans did not cover all of my tuition and books. My mom and I financed the rest left over after grants/scholarships/loans by working.

I will not be needing loans to cover my grad school as the cost is much lower and I have secured a position that waives my tuition.

My mom taught me how to find out how to use credit and while I am not perfect, I try very earnestly to be responsible with my money.
-reba.



Palyxandra -> RE: Credit Cards & College Students (6/15/2009 1:53:34 PM)

quote:

ORIGINAL: Ps103

It seems to me that the current system not only saddles college students with debt, but actually encourages it and leads them to believe that such debt is "normal" and "necessary."

What do you think of this? Will limiting the access of credit cards to college students be a positive move?

If you are (or recently were) a college student, did you graduate with debt, either credit cards or student loans? If you had student loans, was the money you received more than what your tuition and books cost?


Hey Ps,
I just graduated from a public college a month ago. I felt the pressure to get a credit card (I forget why), but I got one my freshman year. I think I heard someone say that if you need a credit card to build your credit history. So I used it for about 30 dollars a month for food items, etc and paid it off as I used it. (I haven't touched it in a few years).

I graduated with a few thousand dollars in student loan debt. At my institution, we had book rental fees. So when we added up tuition and fees, most books were already included. I got a job on campus, but it didn't pay much, so I received the extra money in student loans so that I would have additional money for things I knew I would need to buy (I have six brothers and sisters so my parents can't help us all financially). One semester I bought a computer with the money! I declined some money, but for the most part I took extra. The last 1000 dollars I received (spring of my senior year) is going towards a car I am going to buy at the end of the summer.

I believe that most college students are not responsible enough for credit cards and excess student loans, and on a similar but separate topic, I have a huge pet peeve with parents who pay EVERYTHING for their students.



GroupW -> RE: Credit Cards & College Students (6/15/2009 7:22:50 PM)

Answer from a banker:

Giving credit cards to anyone without an income is just silly.

Ruling out college students just because they are college students isn't really the answer either. In the end, it should just be an underwriting decision. Either you have the financial acumen to manage credit, or you don't. Either you have the ability to pay it off, or you don't.

Begin with decent underwriting rules, and the rest takes care of itself.



Ps103 -> RE: Credit Cards & College Students (6/16/2009 9:53:02 AM)

quote:

Giving credit cards to anyone without an income is just silly.


I guess that is my biggest beef. It *is* silly. And I also resent the idea that parents are expected to pay the bills if it gets out of control[:@]. At least if parents have to co-sign (and I think it is foolish to co-sign) they know what they could be getting into.

I also agree that educating kids about credit (and how compounding interest can work for you or against you) is essential, but I do not think it takes place anywhere on any sort of scale--especially for the kids that need it most.

Question: would a secured card help with building a credit history?



GroupW -> RE: Credit Cards & College Students (6/16/2009 10:11:27 AM)

quote:

ORIGINAL: Ps103
And I also resent the idea that parents are expected to pay the bills if it gets out of control[:@]. At least if parents have to co-sign (and I think it is foolish to co-sign) they know what they could be getting into.

I also agree that educating kids about credit (and how compounding interest can work for you or against you) is essential, but I do not think it takes place anywhere on any sort of scale--especially for the kids that need it most.

Question: would a secured card help with building a credit history?


Correct on all counts, I think. Yes, a secured card would help build a credit history and a much better idea that a banker relying on mommy and daddy to bail out both child and banker. (I find myself apologizing for my profession a lot these days.)



saycheeeeeeese -> RE: Credit Cards & College Students (7/5/2009 3:49:42 AM)

imho- the fact that a person can't trust himself/herself with proper spending habits doesn't make it necessary to make a rule about not giving students a chance with credit cards.

what if a person doesn't have any family financial support - should he/she not get an education? (getting an education does involve moving expenses, deposits on housing, etc).

i am now a dentist ... and i needed credit cards in addition to student loans. yes, i could have potentially taken a few years off from school in order to work, but what would be the point of working a minimum wage job for a year or two if now with the degree i can make a bit more?



GregandJenny -> RE: Credit Cards & College Students (7/5/2009 11:12:40 PM)

quote:

and i needed credit cards in addition to student loan


That in and of itself is the problem. People feel that they need credit. What happens when you're degree doesn't land you that perfect job" and you continue to need credit to live. It seems to be a cycle for many that some can't get out of.

It's dangerous to need a crdit card because it doesn't take into account that circumstances may not allow you to pay it back.

G



Ps103 -> RE: Credit Cards & College Students (7/6/2009 2:34:24 AM)

quote:

That in and of itself is the problem. People feel that they need credit. What happens when you're degree doesn't land you that perfect job" and you continue to need credit to live. It seems to be a cycle for many that some can't get out of.


Exactly.

If it weren't for the ease of getting student loans and credit cards, how much do you think a college education would cost?

For that matter, if it weren't for 30 year (and more) mortgages, how much do you think houses would cost?

Or cars without finance companies?

Or other goods without credit cards?

Things cost so much because people don't mind paying more if they can spread it over time.

As for getting a college degree, one can always work their way through school...Not a popular concept, I will admit, but definitely a workable one.



saycheeeeeeese -> RE: Credit Cards & College Students (7/7/2009 4:42:50 AM)

quote:

ORIGINAL: Ps103
That in and of itself is the problem. People feel that they need credit. What happens when you're degree doesn't land you that perfect job" and you continue to need credit to live. It seems to be a cycle for many that some can't get out of.


i understand what you are saying ... and i'm sure there are people who just take out loans and charge up credit cards without giving it a second thought, and yes, some dig themselves so deep that they can't get out of debt. at the same time, everyone shouldn't be punished for the mistakes of many.

what happens when a degree doesn't land a perfect job? well ... i guess there's always a certain risk ... i'm glad i took that risk.

and ... i really did NEED the credit cards. i'm not sure how to say it in a different way, but it wasn't a "want" ... but a real "need."


quote:


As for getting a college degree, one can always work their way through school...Not a popular concept, I will admit, but definitely a workable one.


that depends. in my last 2 years of high school, i was able to simultaneously complete 2 (full-time) years of college and i worked 20 hrs/week and took the DAT (dental admissions test) and the MCAT (medical college admissions test). that was possible. but, working through dental school is ... impossible. i started dental school with no loans ... and ended up with $200,000.

i guess i'm just so fired up about this topic because i think everyone deserves a chance, and there are responsible college students that already have to jump through many hurdles.

btw- if it weren't for loans, you are right, things would probably cost less. BUT, at the same time, only the rich would be able to afford them. someone like I, who emmigrated here as a child, with $180.00 in my parent's pockets would have pretty much no chance of a better life. America is the land of opportunity ... it should be kept that way.

it is easy for people to pass judgment about other people's use of resources, and you don't have to write it here, but are you a doctor? or lawyer? how much was your education and what did you have to go through to get it? (if a dental degree costs $200,000 and you want to be a dentist, how long will it take for you to save up that money?) i don't mean to brag about myself, but i do want to show you that there are responsible people out there and it is possible to become a doctor of dental surgery at the age of 23.



GregandJenny -> RE: Credit Cards & College Students (7/7/2009 11:26:30 AM)

quote:

i don't mean to brag about myself, but i do want to show you that there are responsible people out there and it is possible to become a doctor of dental surgery at the age of 23.


Nice! That is a good accomplishment.

I have a question though. If you didn't work, how did you obtain a credit card and more importantly how did you pay for it?



saycheeeeeeese -> RE: Credit Cards & College Students (7/8/2009 2:51:44 AM)

It all started with the American Express card for Students (which i used to build up a solid credit history. i would buy my books on the card and immediately pay it off with the student loan money, thus paying no interest). Then, after 4 years of not working while in dental school, i needed to pretty much max out my cards to pay for my dental licensure exams. (what is the point of getting a dental degree without a state dental license, right? lol) ... there were no student loans available to pay for the exams.

i understand - credit cards aren't fun. i'm still paying mine off ... but i'm thankful that i had them. otherwise, i'd be working at "mcdonalds" trying to save up $10,000 to take the licensing exam. who knows how long that would take (and meanwhile, trying to defer my student loans which would be in repayment).



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