Credit Card Debt
As this is the time of year many young people get ready to head off to college I am reminded about the plethora of credit card offers thrown at our students without the parent’s knowledge. A notice in the school mail box, a free drink, a cool article of clothing, free tickets to a much sought after event – all come-ons by the credit card companies to sign on the dotted line luring the students to get and use their credit card.
According to an article in today’s ABC money news, “Credit Card Borrowing Tightens for Under-21s”, a staggering 84% of all college students have credit cards and 56% of them have more than four, according to a national study by Sallie Mae.
In 2008, college seniors graduated with an average credit-card debt of $4,700, a 62% increase since 2004. Nearly 20% of them carry balances of more than $7,000.
From my many years in mortgage banking, I can tell story after story about young first time homebuyers, college graduates, seeking to buy a home and could not due to their excessive credit card debt they incurred while in college. I hope the provisions in the new Credit Card Accountability, Responsibility and Disclosure Act of 2009, which will go into effect in February, will rein in college student debt, making it harder for students to qualify for credit cards until they have learned how to handle and pay for the debt.
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