College students trapped by credit debt

By Harold Gwin

YSU peer mentors offer counseling to help avoid credit card problems.

COLUMBUS — Credit card companies are aggressively marketing to college students, and many are trapped by “unfair terms,” including “massive penalty fees and the imposition of punitive interest rates” of 36 percent or more, according to a recent multistate study.

Most students who responded to a survey also said they favored stricter regulations of credit card marketing, according to the U.S. Public Interest Research Groups, a nonprofit advocacy group that released the findings.

“In some cases, it’s iPod shuffle for credit card,” Ed Mierzwinski, consumer program director, told reporters during a conference call, concerning the means credit card companies use to entice new student customers.

He added, “A lot of students use their credit cards for everything on campus. We found that almost a quarter of students used credit cards to pay tuition. More than half used credit cards to pay for books.”

“I try to get them before they get into trouble,” said Diane Platton of Canfield, one of the peer mentors for first-year students at Youngstown State University.

Mentoring covers a wide range of topics and personal budgets and finances are just one part of the process provided through YSU’s Center for Student Progress.

Platton, a third-year journalism and secondary education major, has been a peer mentor for two years and has a current load of 213 students assigned to her.

She said she tries to explain the dangers of overspending credit cards to her charges as part of the mentoring process.

“It’s easier to get college students to fall into the trap,” Platton said, noting that they are frequently looking for easy ways to get the things they want.

Platton said she has only two credit cards but generally won’t make a purchase unless she has the cash to cover it. If she does use a card, she makes sure she pays the bill off immediately to avoid incurring interest and possible late fees, she said.

Some students don’t understand or know how to use credit and are already experiencing problems with credit card bills. Platton said the mentors can offer them helpful Web sites that can be of benefit in planning and sticking to a budget and can also help them review and understand their credit report.

One of the worst consequences of credit card debt is the belief that they can cover their credit card problems with payday advances from storefront short-term lenders, she said.

When they take out advances on their paychecks, they just get deeper and deeper into debt, Platton said.

In addition to the peer mentor program, there are a couple of YSU student groups that also offer financial counseling through the Department of Finance and Accounting.

The Public Interest Research Groups surveyed more than 1,500 students at 40 colleges and universities in 14 states from October through February. Ohio students were not among those surveyed, though information from Attorney General Marc Dann and Ohio State University are cited in the resulting study.

College campuses are attractive to credit card marketers, considering, according to the study, that adults had nearly five credit cards per household in 2006.

On campus, “... Banks can seek out customers who have never had a card. College students are among the most prominent targets for this marketing. They are young, and understand that they need credit to get ahead in the world.”

Platton said she hasn’t seen credit card companies actively recruiting memberships at YSU, but, “They’ll chalk the sidewalks,” she said, referring to the practice of leaving an open message on a sidewalk offering something free to entice students to visit a nearby off-campus location.

One example has been an offer of free submarine sandwiches. Students going to the designated location to get the sandwich have found that they have to sign up for a credit card to get the free food, Platton said, adding that some do so without thinking of the possible consequences of getting another credit card.

A total of 80 percent of respondents to the PIRG survey also said they received mailings from credit card companies. Another 22 percent said they had received about four telephone solicitations per month, according to the survey.

About 66 percent of the survey respondents said they had at least one credit card, and more than half said they used them for day-to-day expenses and books.

Among its recommendations for dealing with the issue, PIRG suggested prohibiting the use of gifts in marketing credit cards, blocking the purchase of student contact lists by credit card issuers and increasing financial education on college campuses.

X CONTRIBUTOR: Marc Kovac, Vindicator correspondent.