The Young and the Indebted

[marmar]

from the Center for American Progress:



The Young and the Indebted


By Erica Williams, Tim Westrich | July 2, 2008

Kali Dun, five years out of the University of Virginia, still owes thousands of dollars to credit card companies from debt she racked up with credit cards in college. On campus, she said, “ were everywhere…like vultures. Outside of my dorm, at football games, and in the quad. I took their teddy bears, free pizza, tote bags, and complicated, convoluted sign up forms.” But along with the giveaways and incentives, she also took high fees, high interest rates, and complex terms, and by her junior year, Kali had incurred nearly $3,000 in debt on the three cards she signed up for on campus.

High fees, high interest rates, and complex terms are among the most common credit card company practices weighing down students. They’re also practices that heighten the risk of default. And default Kali did.

Kali’s story is but one of many that Campus Progress, a project of the Center for American Progress, has heard from young people around the country. It illustrates the unique challenges that college students face with regard to credit cards.

Credit card companies aggressively market to college students. Their techniques include buying lists from schools and entering into exclusive arrangements to market directly to students through the mail, over the phone, on bulletin boards, and through aggressive on-campus and near-campus soliciting—facilitated by so-called “free gifts.”

Young people face the high fees, heavy interest rates, and complex terms that all Americans who have credit cards face. Credit cards carry substantially higher costs than other forms of credit due to myriad fees and high interest rates. The result is that many students unwittingly slide deeper and deeper into debt as they fall prey to the lack of transparency in credit cards.

This situation is particularly damaging for students because, according to a 2004 study by Nellie Mae, 76 percent of undergrads have credit cards, and the average undergraduate has $2,200 in credit card debt. And whereas in 1989, 18- to 24-year-olds with credit cards devoted 13 percent of their income to debt payments—both credit card debt and student loan debt—today’s 18- to 24-year-olds devote a startling 22 percent of their income to servicing their debt. ......(more)

The complete piece is at: http://www.americanprogress.org/issues/2008/07/student_cards.html

[BigDaddy44]

1. Looks like she wasn't as highly educated as she thought she was

Sorry, but I don't feel too much sympathy for adults (young adults, but adults nonetheless) too stupid to realize they shouldn't be borrowing money to buy crap they don't need.

[Indenturedebtor]

11. Yes who needs clothes and a car to get a job? Things are not the same as they were 30

Or even 10 years ago. Blame the victim. That's the spirit!

Why have wages remained stagnant for 30 years while profits for companies have increased? :idea:

[undeterred]

2. Students need to be educated about this

Credit cards were not marketed to students when I was at college- thank goodness. A lot of people have no sense of money until they are supporting themselves and are truly independent from their parents.

[Lance_Boyle]

3. they were when I was in college

I got one and was responsible with it.

No sympathy from me for those who were less-than-responsible with theirs.

[undeterred]

4. Did your parents pay your way through college?

[Lance_Boyle]

6. scholarships

not that it makes any difference - the credit card offers you get on campus do not require co-signers or co-applicants, so no parents needed.

Fortunately, they also tend to come with reasonably stingy limits (reasonable for young people with no credit history) so that, taking the person in the OP for example, the less-then-responsible rack up 2 or 3 thousand instead of 10K+ in debt.

[Xenotime]

5. Credit cards are a good way to learn about financial responsibility

And, you get bonus miles and points which you can use later on. It's the irresponsible ones who decide not to pay their bills.

[depakid]

8. "It's the irresponsible ones"

You mean 3/4's of the undergrads on campus?

[YOY]

7. I used to tell them to f*** off in college.

I guess I was on the right track.

[Bonhomme Richard]

9. My youngest graduated a year ago and he had..........

credit cards that he was responsible using. He lives at home now while saving ($5,000.00 so far) to buy a house with his girlfriend.
I'm lucky....He's way more level headed than my oldest who is constantly in debt and having a very hard time of it.

[izquierdista]

10. Bring out yer HTTs, bring out your HTTs!

Nothing like a piece on college students falling victim to deceptive credit card marketing practices to bring out the Holier Than Thous (HTT) that weren't taken in. I have to confess that I too have fallen victim to a carefully crafted marketing scam from time to time, with much chagrin and regret. Would that I could be like the HTTs and see all of them coming and turn the other way, walking on water to get away.

Personally, I think colleges should kick all these usurers off campus and limit credit card solicitations to the campus credit union. But that would never fly, not when the administration is getting kickbacks in the form of stadiums, on-campus restaurants, sponsorships, and other commercial support that makes their educating business grow. Yes, college has nothing to do anymore with the quest for knowledge and more with the training up of drones who will respond to the continual message to consume, Consume, CONSUME!.