Teasurer targets credit card companies that prey on students

Most college students already have enough things to sort out without having to learn how 22 percent interest rates can haunt them for the rest of their lives.

New legislation promoted this week by state Treasurer Alexi Giannoulias and supported by many area legislators aims to reduce credit card companies' ability to prey on college students and entice them with freebies by prohibiting on-campus giveaways and restricting access to student information.

"Every year credit card marketers flock to college campuses handing out free T-shirts, pizzas, gym bags and other goodies to students 'just for taking a few minutes to fill out a quick application,'" he said. "But there's nothing free about these gifts. Credit card issuers are aggressively preying on students, often times with no verifiable income."

In addition to the on-campus signup drives, several colleges and their alumni associations have entered million-dollar agreements with banks to promote their affinity credit cards to students and alumni.

"They sign up for a credit card with their mascot on the front, thinking they're showing school pride not realizing their school may have sold them out for a royalty check," he said.

Giannoulias referred to a 2005 Nellie Mae survey indicating 76 percent of all undergraduate students had at least one credit card. By their senior year, 56 percent had four or more credit cards with an average balance of $3,000.

"Decent credit plus impulsive students equals big financial trouble on our college campuses," Giannoulias said.

State Sen. Linda Holmes and Rep. Linda Chapa LaVia, both Aurora Democrats, said they intend to support the legislation in January when it's expected to be introduced.

"We want to educate young people and make them informed consumers," LaVia said. "You have to be smart and shop around for the best rates. You need to read the fine print and understand that just making the minimum payments can get you into trouble."

Aurora University, where Giannoulias proposed the legislation, already bans all credit card solicitors on campus. The university also includes a unit on credit card debt in a personal wellness class.

"We don't want to send the message that we endorse the credit cards," said Acting President Andrew Manion. "We know what they can do to students, particularly less experienced consumers."

FYI

Some details of state Treasurer Alexi Giannoulias' proposed credit card legislation:

• Ban credit issuers from offering gifts when marketing credit cards on campuses;

• prohibit selling or transferring of student names and personal information by colleges, universities, their foundations and alumni associations to credit card lenders;

• call on state colleges, universities and their affiliates to disclose their marketing agreements with banks that target students;

• require colleges and universities to conduct financial literacy education for freshmen if the schools allow marketing or advertising of credit cards to undergraduate students.