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The CARD Act and its Impact on College Campuses
The CARD Act, which was enacted earlier this year, is perhaps the most sweeping credit card legislation in history. And one of the most instrumental parts of this legislation is designed to protect young consumers.
The College Campus Game
For over a decade it was quite common to see creditors sitting at tables lined up along any college campus lawn. In fact, most creditors saw young consumers as a great way to build their businesses. As a result, credit card companies would push easy-to-get student credit cards at college students, complete with plenty of free gifts and incentives.
For most college students it was the first time that they were able to receive credit; therefore, it was quite easy for credit card companies to sign up college students. Heck, in any given day you could apply for multiple cards!
College Students and their Mounting Credit Card Debt
The college-student market was a hit among creditors, and for good reason. According to Sallie Mae, 42 percent of college students carry a credit card. As of 2008, college students graduated with an average credit card debt of $4,100; that an increase from $2,900 from just four years earlier.
Sallie Mae also notes that 69 percent of college freshmen had a zero credit card balance in 2004; that number plummeted to just 15 percent in 2008.
Although there were many college students who used credit cards for useful purposes, such as purchasing text books and school supplies, there were just as many that abused credit, thereby resulting in a great deal of credit card debt, even before they graduated from college.
For years, lawmakers complained that the giveaways and other incentives on college campuses were luring college students into credit cards that they could not handle or afford.
As a result, Congress passed strict regulations regarding college students in its CARD Act. Now, creditors can no longer issue credit cards to college students unless they have the income to back it up. Although this may be inconvenient for college students, it may prove to be gift because college students will no longer be starting their professional lives with mountains of debt.
