|
College student credit card debt is exploding, and Rep. Tom Petri (R-WI) joined with Rep. Patrick Murphy (D-PA) Thursday to introduce the Student Credit Card Transparency Act, which would help students and their parents learn how colleges and alumni groups are benefiting.
According to a recent study, Petri said, students are now graduating with an average credit card debt of more than $4,100, up from $2,900 four years ago. The average number of cards per student has grown to 4.6, with over half of college students reporting they have four or more cards.
The combined impact of credit card debt and growing student loan debt can greatly limit a student's future career choices. Compounding debt from late payments and high penalties can further jeopardize a young adult's financial future by making it difficult to take out a first mortgage, buy a car or even rent an apartment.
"We all know through our own experiences or through our children's, that college students have become prime targets for credit card marketing campaigns," Petri said. "Most students enter college without credit cards and are quickly saturated with e-mail offers, direct mailings and on-campus solicitations to sign up for their first credit card. What students don't know, however, is that many colleges, universities and alumni associations have entered into lucrative deals with these companies to allow exclusive marketing of their cards."
Petri said that in these arrangements, schools receive large cash payments in exchange for handing over their students' contact information. These agreements may also go further and give companies exclusive face-to-face access to students on campus, such as during sporting events or at the student union. Some provide the university or alumni with additional money based on a percentage of purchases using the card.
"The question is, are the colleges and alumni groups operating in the interests of the students or simply for the benefit of themselves," said Petri. "We need to know more about who benefits and by how much, and parents and students need to know that too."
"If credit card companies are paying schools for students’ personal information and to market on campus, parents and taxpayers have a right to know,” said Congressman Patrick Murphy. “I’m glad to work in a bipartisan fashion on this legislation with a great leader on educational issues - Congressman Petri of Wisconsin,” said Murphy.
The Student Credit Card Transparency Act would require greater transparency by requiring credit card companies to report on their arrangements with colleges and alumni associations. It also would direct the Government Accountability Office to analyze and report to Congress the impact of these arrangements on student credit card debt.
The bill is based on an amendment which Petri and Murphy, for procedural reasons, were not allowed to offer during debate on H.R. 627, the Credit Cardholders Bill of Rights Act, which the House approved Thursday. That proposed amendment had been endorsed by the United States Student Association, the U.S. Public Interest Research Group, the Consumer Federation of America, the National Association of College Admissions Counselors, and the American Association of Collegiate Registrars and Admissions Officers.
|
