Credit Card Bill will Help Young People & Students
May 20, 2009
CONTACTS:
Katie Andriulli – Communications and Outreach Manager, Campus Progress
202-481-8238 / kandriulli@americanprogress.org
Pedro de la Torre III – Advocacy Senior Associate, Campus Progress
202-481-8171 / kandriulli@americanprogress.org
Credit Card Bill will Help Young People & Students
Washington, DC — Today Congress passed the Credit Cardholders’ Bill of Rights by a margin of 361-64 in the House of Representatives, following yesterday’s vote of 90 to 5 in the Senate. The President is expected to sign the bill on Friday afternoon. “By passing this legislation, Congress took a big step toward extending basic protections to all credit card borrowers, especially young people and students,” said Erica Williams, Deputy Director of Campus Progress, who testified before the House Financial Services Committee on this issue last summer on behalf of Campus Progress Action.
Currently, young people and college students are aggressively targeted by credit card companies because they have less experience with credit, and because borrowers tend to hold on to their first card for a very long time. Card companies have also entered into controversial multi-million dollar deals with schools in order to purchase student contact information, issue co-branded cards, and access students through on-campus booths and sporting events. Often card companies single out students with “special offers” despite their lack of income or co-signer.
The Credit Cardholders’ Bill of Rights specifically helps young people by limiting unsolicited marketing to young adults (18-21), and ensures that young adults have either a co-signer or an independent means of repayment – in other words, card companies will treat young people more like any other potential borrower. The bill will also require that colleges disclose campus marketing agreements with credit card companies, and that credit card companies report the agreements to the federal government.
Finally, the legislation will also extend basic protections – such as limits on over-the-limit and late fees – to credit card borrowers and curtail some of the card industry’s worst abuses.
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Campus Progress is the youth division of the Center for American Progress, a nonpartisan, nonprofit progressive organization. Through programs in activism, journalism, and events, Campus Progress helps young people make their voices heard now on issues that matter, and works with young leaders and organizations nationwide to build a strong, united progressive movement that can bring long-term positive change. Campus Progress runs a daily web magazine, CampusProgress.org; supports student publications on 50 campuses; supports local and national youth issue campaigns; and has held over 600 events and film screenings. For more information, please visit Campusprogress.org.
Fact Sheet: Young People and Credit Cards
Students use their cards for educational expenses.
- According to a recent study, 92% use their card for direct educational expenses like books and school supplies, and charged an average of $2,200 (double the 2004 figure). Almost 1/3 use credit cards for tuition.
- According to the same study, the main reason cited for charging educational expenses to credit cards was that they did not have enough savings or student aid to cover their expenses. Another top choice was that college costs ended up being higher than expected.
The problem is quickly getting worse.
- Students are charging an average of $2,200 on their credit cards for direct educational expenses. This figure has doubled since 2004.
- College seniors that have credit cards are graduating with an average balance of $4,100, up 41% from 2004.
- Almost one out of five students carries more than $7,000 on their credit card. This figure has doubled since 2004.
Young people are struggling under the weight of student loans & credit card debt
- Over six in ten college graduates are burdened with educational debt. Of those, four in ten, and more than half of African-American and Hispanic borrowers, are burdened with an unmanageable level of student debt.
- The average student today graduates with student debt twice that of graduates a decade ago, and enters tough job market, with lower wages than they would have found in 2001.
Credit card companies are lobbying against the interests of young people – Congress should stand up against credit card companies
- According to USA Today, five major credit card companies increased their lobbying expenses by 40%—or $5.5—in the 1st quarter of 2009, compared with the 1st quarter of 2008.
- By passing this legislation, Congress can show young people—who are voting in record numbers and increasingly engaged in political and social causes—that it cares about their future more than lobbyists and campaign contributions.
Credit card companies target students
- Credit card companies have entered into multimillion dollar deals with colleges and alumni associations across the country.
Some examples:
- The University of Tennessee had a multi-year $16.5 million agreement with 1st USA, and another $10 million agreement with Chase. These agreements included a co-branded card.
- The University of Iowa Alumni Association got more than $550,000 from Bank of America each year by marketing credit cards to their members and U of I students. They sent out a solicitation letter saying, “Imagine the convenience of being able to purchase supplies for your classes, without worrying about carrying a lot of cash.” U of I was also guaranteed $200,000 each year for the athletics department, which allowed the use of student athletes for marketing purposes.
