Running head: ELIMINATING STUDENT DEBT

Eliminating Student Debt Bonnie Heath COM/156 August 29, 2010 Lori Wilson

ELIMINATING STUDENT DEBT

Eliminating Student Debt What I hope to accomplish in this paper is to show the reader that because of the predatory practices and shady deals with the different schools, credit card companies should not be allowed on campuses marketing to college students. The level of debt in society today is high enough and credit card companies do not need to be targeting college students just to increase their number of customers. Even though they should be allowed to market to college students because it is a good way to learn about credit cards and how to handle them responsibly, credit card companies should not be allowed on campuses to market to college students. College students already have enough debt as it is if they do not receive scholarships or help from their parents, and college students, fresh out of high school, do not know enough about personal finance and personal credit to be responsible about credit cards. I happen to agree with this statement because when one thinks about it, college students who do not have scholarships or help from their parents are already in enough debt as it is. One argument for credit card companies being allowed to market to college students is credit cards are a way for students on their own for the first time to establish a good credit score, which then can be used later in life to obtain loans for cars or homes. Credit card companies market to college students in the hopes that once that student has that card in his or her wallet that he or she will keep that particular card for years and its upgrades in the years to come therefore netting the credit card company more profit over a longer period. Because of their predatory practices and shady deals with the different schools, credit card companies should not be allowed on campuses marketing to college students. These deals,

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called affinity agreements, are deals between banks and schools in which the bank pays the school one dollar for every student who keeps his or her credit card open for 90 days. Some colleges that still engage in the practice even sink so low as to sell student and alumni names and addresses to credit card companies while defending its actions. Some colleges even receive bonuses when students go into debt. Some of the nation's largest and most elite universities stand to gain millions of dollars from selling the names and addresses of students and alumni to credit card companies while granting the companies special access to school events (Huffington Post, 2007, para. 1). According to a study conducted by the United States Public Interest Research Group (PIRG) Education Fund, four out five (80%) students supported adoption of strong campus credit card marketing principles and of those students who supported stronger principles nearly three-in-four students (74%) asserted that only cards with fair terms and conditions should be marketed on campus. Students also overwhelmingly (67%) opposed the sale or sharing of student lists (which can include home and dorm addresses, email addresses and land line and cell phone numbers) with credit card companies. Many first time college students assume that they will learn to handle their personal finances in college so they do not know enough about personal finance and personal credit to be responsible about credit cards. The truth of the matter is that many of the finance courses taught in college do not teach students how to improve their spending habits or how much to put in an emergency fund. The best way to remedy this issue is to require high school students to take either a personal finance course or to pass a competency test for personal finance before graduating from high school. According to the 2010 Board of Regents of the University of Wisconsin System (2010), Unfortunately, relatively few teachers believe they are adequately prepared to teach such topics, according to a study by two University of Wisconsin- Madison

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researchers. The report goes on further to say that many teachers would be open to more learning opportunities in both financial education subjects and teaching methods. According to Kim Clark of the United States News and Report because many states are decreasing the number and size of grants that they give to recent high school graduates, college students already have enough debt if they do not receive scholarships or help from their parents. Although parents may have been able to work their own way through college, in the past 20 years tuition has risen much faster than wages from jobs and financial aid. Because many students do not receive financial help, they must work enough hours to pay rent, utilities, and other basic living expenses, leaving less time and attention for studying. As a result, the student often drops out of school. Although many parents or guardians do not or cannot provide financial support, colleges and government financial aid agencies expect them to contribute to the costs of educating their dependent children.(Clark, 2010). Generally, the government and colleges expect parents to contribute to a student's education until the student turns 24, becomes a veteran, gets married or becomes a parent (Clark, 2010, para. 7). In conclusion, although they should be allowed to market to college students because it is a good way to learn about credit and how to handle it responsibly, credit card companies should not be allowed on campuses to market to college students for two main reasons. First, college students do not know enough about personal finance and personal credit to be responsible about credit cards. Most important, college students already have enough debt as it is if they do not receive scholarships or help from their parents and there is already enough debt in this country without credit card companies tricking students who do not know better into getting these credit cards, adding to it.

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References Clark, K. (2010, January 20). Should kids pay own college costs?. U.S. News & World Report. Retrieved from http://articles.moneycentral.msn.com/CollegeAndFamily/SavingForCollege/should-kidspay-own-college-costs.aspx?page=1 Protess, B. & Neumann, J. (2010, June 8). Banks Paying Colleges For Students Who Rack Up Credit Card Debt. The Huffington Post. Retrieved from http://www.huffingtonpost.com/2010/06/08/banks-paying-colleges-for_n_604109.html U.S. PIRG Education Fund. (2008, March) The Campus Credit Card Trap Report. Retrieved from http://www.truthaboutcredit.org/campus-credit-card-trap 2010 Board of Regents of the University of Wisconsin System. (2010). Study shows need for teacher training in personal finance. Retrieved from http://www.news.wisc.edu/18148