Helping students avoid debt

LEGISLATURE | Ban on freebies for credit applications sought

By Kara Spak

Chicago Sun-Times, Chicago, IL

Published Tuesday, September 9, 2008

Sydney Maier wanted a free 6-inch veggie sub.

She ended up with a credit card.

Maier, 21, a student at the University of Illinois at Chicago, received her first credit card from a marketer at a Subway, where she was lured by a coupon she received on campus promising a free sub. "I was a little nervous since I was signing up for this in a sandwich shop," she said.

Maier hasn't gotten into any trouble with her credit card, but plenty of students have.

Alexi Giannoulias, Illinois' treasurer, plans to announce legislation today that would clamp down on promotions that credit card companies gear toward undergrads, including free T-shirts, Frisbees or iPod headphones for filling out a credit card application.

"Basically we want to limit the ability of credit card companies who prey on college students," Giannoulias said. "Unfortunately this can lead to serious long-term debt for students and their families."

A survey of college students published in March 2008 by the U.S. Public Interest Research Group found nearly two-thirds of college undergrads have a credit card. Seniors were carrying average debt balances of $2,623, more than double the average $1,301 debt of freshmen. Students said beyond the on-campus solicitations, they received an average of five credit offers through the mail each month.

Brian Imus, Illinois director of PIRG, said credit card companies are happy to issue cards to students without doing the credit check required of other customers.

"They're able to trick students into getting credit cards at high interest rates, jacking up the fees after students have racked up debt," Imus said.

In addition to banning freebies for filling out credit applications, Giannoulias wants to force disclosure of agreements that alumni groups or foundations have with credit card companies so students will know if personal information is being sold to credit card companies.

  
     
 
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