As if college students didn’t have enough debt from student loans, it appears credit card companies are still targeting them even though the CARD Act prohibits such offers to anyone under 21.
A recent survey of 300 undergraduates done by University of Houston Law Center finds that most of them have received credit card offers. Houston University Professor Jim Hawkins, in an interview with The Wall Street Journal said “there are some things that haven't changed."
Student Solicitation Ban
The CARD Act took effect in February, 2009 and was designed to stop solicitations that lured in students and then left them buried under heavy credit-card debt when they left school. Under the rules, banks and card issuers were banned from offering credit cards to anyone under the age of 21, unless they have a qualified co-signer or proof of sufficient income to repay the debt.
According to the survey, 76 percent of those surveyed under the age of 21 said they had received a credit-card offer since the beginning of 2010 and 73 percent of freshmen say they saw credit card issuers marketing to students off campus. As for the income requirement, 29 percent claimed their student loans as part of the income they reported to the credit card companies in order to get the cards.
Also, 47 percent of freshman reported seeing credit card companies offering tangible gifts on and around campus, another violation of the CARD Act.
Loopholes
Hawkins said the CARD Act should have made it much less likely for freshmen to have seen advertising because the law has been in effect the entire time the freshmen have been in college. However, with so many loopholes in CARD, credit card companies still have easy access to young consumers.
"It concerns me that the marketing hasn't abated," Hawkins said in an interview with the Washington Post. "I think one answer would be to ban marketing to college students completely. If we really think it's important not to market to students, why not make it easier by imposing an absolute prohibition on marketing rather than imposing certain rules?"
Moreover, college students will be paying back more debt from their loans than ever before. For the first time ever, total student loan debt has outpaced total credit card debt. Student loan debt is said to be increasing at a rate of $2,800 per second and is now around $880 billion.
