Credit card use has been a part of college student life for many years. Now, aid officers need to understand that recent credit card legislation intended to restrict student access to credit cards will ultimately affect students in graduate and professional schools, who often rely on credit cards to pay for expenses such as exam fees, job interviews, and residency applications that aren’t covered by financial aid. Some students also use credit cards to finance basic living expenses while in school.
Peter Osborne, Management Consultant and Founder of Bulldog Management Solutions pointed out some troubling statistics.
· Most students have credit cards, but more than 12% of them are delinquent on their account.
· 33% have never discussed their credit issues with their parents.
· 84% would welcome more educational information to help them better understand their problem and solve it.
If students are reluctant to approach their parents with this type of problem, who will they turn to for guidance and advice? Why not us?
Peter also spoke to the group about some of the new laws in place to protect the consumer against:
· Unexpected rate increases.
· Rate increases on existing balances.
· Unauthorized over-limit fees. (Consumers must now opt-in and agree to the fee in order to charge over their limit. Those who opt-out will have their transactions rejected if they exceed their credit limits, thus avoiding over-limit fees.)
· Unfair payment allocation. (When consumers have accounts that carry different interest rates for different types of purchases - i.e., cash advances, regular purchases, balance transfers or ATM withdrawals - payments in excess of the minimum amount due must go to balances with higher interest rates first.)
There is so much more to understand about credit card debt. Going forward, as we counsel our students on financial matters, it will become increasingly important to address students’ credit card usage in the process.
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