Volume 134, Issue 5
College Students Easy Prey For Credit Card Solicitors
Companies seeking applications banned from Ocean Ave. campus as of August 26, 2002
By Brad Wall
Those words are becoming all too familiar to college students across the United States. Inexperienced in the ways of credit, they sign up for credit cards, get the free T-shirt, and open themselves up to years of crippling debt.
According to a 2001 Nellie Mae survey, the number of students with credit cards increased 24 percent from the previous year. Between the freshman and sophomore years, the proportion of students with credit cards jumped from 54 percent to 92 percent.
Years ago a college graduate's main debt would have been student loans. Now-adays the average college student doubles his credit card debt and triples the number of cards in his wallet between freshman year and graduation.
Furthermore, according to the Nellie Mae survey, 21 percent of undergraduates with credit cards carry balances between $3,000 and $7,000 - a 61 percent increase over the 2000 numbers. Graduating students average $20,402 in combined education loan and credit card balances.
And what are colleges doing? Turning a blind eye for the sake of profit. Credit card solicitors pay colleges "admission fees" to come onto campus, set up tables, and sell credit cards to students.
Until recently City Col-lege was no exception. For $125 a day credit card companies could buy access to City College students - students who shouldn't even qualify for credit cards.
"I found it impossible to believe that students who have no job and no co-signature could get credit cards," said Director of the Center for Student Credit Card Education Carol Carolan. "On a business level it's unethical, and on an individual level it's immoral."
When Associated Stu-dents Vice President of Finance Jasmine Berndt took office, City College was allowing credit card solicitors to work out of RAM Plaza. Once she realized that Associated Students controlled who could and could not vend at RAM Plaza, she decided to sweep the campus clear of credit card vendors.
As of August 26th of this year, companies soliciting credit card applications are banned from Ocean Avenue campus.
"I knew a lot of people who [got in trouble with credit card debt]...so when I got into office and realized that I could [get rid of credit card companies], I did," said Berndt.
She added that when she was 17 years old, she applied for a credit card to get the Slinky offered with the application.
"What I did was probably illegal," she said. "But I still got the credit card."
It seems that ethics may not be the solicitors' strongest suit. According to Berndt, solicitors at the credit card booths told students not to date their applications.
And while banks such as Wells Fargo respected the RAM Plaza ban, Sheila Klein Promotions, the company that set up and manned the booths, was not as compliant.
Berndt said that Sheila Klein fought tooth and nail to stay on campus. When that failed, she said, Sheila Klein tried to undercut City College by rewording contracts to avoid paying their proper due. According to Berndt, City College never received the money that Sheila Klein owed.
Sheila Klein did not respond to attempts to reach them.
Credit card companies and major credit card issuers promote themselves as good citizens. Visa, for example, maintains a Web site that explains how to manage a budget and build good credit. There students can find this bit of friendly advice: "It's not uncommon for people to have difficulty handling credit, especially when they are just starting out... keep in mind that a bad credit rating can have serious negative consequences down the road."
And yet the big credit card companies are aggressively targeting vulnerable college students by hiring marketing companies like Sheila Klein and One On One Marketing, which boasts on its Web site:
"Need 100,000 college student accounts this year? One on One is a leading on-campus marketer and delivered over a half a million credit applications from the college market last year alone. We'll put together an on-campus program that will reach your goals cost-effectively by the time Spring Break rolls around!"
The solicitors are persistent. Although credit cards can no longer be marketed directly to students on campus, flyers offering credit cards are still posted in classrooms.
Berndt is helpless to do anything about it. "As easily as I made a policy in RAM Plaza," she said, "I can't make a change [in the classrooms]."
But even if she could, it might not make a difference. As soon as a student turns 18 - sometimes earlier - he or she becomes a target for credit card companies. Offers start pouring in through the mail, promising 0.0% APR (interest rate), cash back on purchases, and bonus airline miles.
Even ballparks aren't safe. While the Giants and A's were displaying their playoff form recently at Pacific Bell Park and the Oakland Coliseum, the credit card issuers had their A-squad out as well.
One young woman at a Giants-Braves playoff game was promoting what sounded like a great deal: apply for a credit card and get a team beach towel or a team duffel bag. "Just apply," she said. "If you don't want the card, just don't activate it."
What she didn't say was that every credit card application puts a negative mark on your credit rating.
That's the danger of credit cards. There are so many little rules and guidelines. Late and missing payments can affect credit for two years, liens, repossessions, and bankruptcies for seven.
Young college students have no idea what they're getting into. To a lot of them, APR might as well be ERA.
And that raises a question. Schools are supposed to prepare students for life in the "real" world. Your credit report sticks to you like a shadow. Should City College offer a class on credit and financial planning?
"I think there is a need [to look into] that issue," said Associated Student President Rich Cantora. "Not a class, maybe a workshop."
Carolan was even more enthusiastic: "I would go one further than that. I wouldn't have [the class] be optional."
It would be even better, she said, if the class were offered to high school seniors. "A lot of the college administrators I've talked to have said: ŚCan't you do something to get high school seniors more education, so that when they come on a campus they are credit-card-literate?'"
In some cases, it might literally mean the difference between life and death. Sean Moyer, a National Merit Finalist with a full scholarship to the University of Texas, racked up over $10,000 in credit card debt. In February 1998, frustrated by mounting credit card bills, the 22-year-old Moyer hanged himself in his bedroom closet.
Mitzi Poole , an 18-year-old freshman at the University of Oklahoma, committed suicide in 1997 by hanging herself with a bed sheet in her college dorm room. According to reports from her mother, her checkbook and bills were spread out on her bed when she committed suicide.
Poole had accumulated just $2,500 in credit card debt, or the equivalent of what Sheila Klein would have paid for 20 days of campus access at City College.
Even with so much at stake, Berndt felt that a class would be of little use. "The reality is you're not going to get students to enroll in a money management course," she said. She offered that change might come in the form of a student-led movement.
Carolan agreed that peer-to-peer education would be the best approach. She said that ultimately it is up to students to avoid the "credit trap."
She offered this advice: "Be aware of all the different ways banks make money off our credit cards, the Annual Percentage Rate [APR], whether they are going to be a convenience user who pays off their credit card balance every month, or if they're going to keep a revolving balance."
She concluded: "Never get more than one credit card. If you can't manage without one, then do without the other stuff."