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No Credit Card Debt at Graduation: Priceless

No Credit Card Debt at Graduation: Priceless

The Student Life via UWIRE

September 17, 2009

“There’s no way to acquire significant debt,” MacDonald said. “Abusing credit cards boils down to a few thousand dollars worth of debt.”

In response to recent studies and widespread anger over predatory practices conducted by credit cards companies, Congress passed a law in May to protect young cardholders. The law requires applicants 21 and younger to have a co-signer on any new credit card account unless they can show that they “have an independent means of repaying.”

In addition, unsolicited pre-screened card offers will be prohibited. Credit cards companies will also be prevented from issuing any free items to apply for a card if the approach takes place on or near a college campus.

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Since credit card companies enjoy extending credit cards to students, the enaction of the law presents a challenge.

“The banks could seek repeal, but I doubt they will,” said Michael Greenfield, professor in the School of Law. “Several of the provisions will be implemented further by regulation of the Federal Reserve Board and the banks no doubt will attempt to influence how those regulations are worded. But this is tinkering at the edges, not negating the requirements of the statute.”

Another provision of the bill encourages universities to provide credit card counseling to students during their orientation programs.

Such programs are a part of Orientation at the University, according to Witbrodt.

“As part of freshman orientation, we provide information to incoming freshmen about credit cards and what the risks are,” he said.

Witbrodt said the University has educated students about credit card use before.

“In the past, we had a program called, ‘What’s My Score?’” Witbrodt said, “and the purpose of the program was to acquaint students with the credit score concept and the fact that the credit score can be just as important a number as a student’s GPA.”

Such programs have been successful in the past.

“We surveyed students prior to the program to get some sense of their knowledge of credit scores, and then we surveyed them after the program to see if their knowledge base had increased with regard to credit scores, and we learned that the knowledge base did increase,” Witbrodt said. “We also learned that while many of our students have credit cards, that on the whole they didn’t seem to be having a problem associated with the credit cards.”

The new law goes into effect in February 2010, but many say the bill will not have a big impact on the University.