For the average college student, the offer of a free pizza or a free sandwich is pretty tempting, and credit card companies know it. With a few quick signatures and a lot of personal information on some seemingly trivial documents, many students unwittingly sign their way to free meals – and a lot of debt. Most students have no idea what they are getting into until that first statement arrives in the mail outlining a cripplingly high interest rate. Although the University has taken modest steps to prevent credit card companies from scamming students on campus, the best remedy is better educating entering freshmen about credit cards so students don’t have monumental credit cards debts to go along with their skyrocketing education debts.
Many college students, like most people, have to rely on credit cards for most their purchases. A study by major student loan provider Nellie Mae found that three-fourths of all college students have credit cards, and 40 percent of them that have at least four. The reason is obvious: Credit cards are simply a more convenient way to pay for college’s daily expenses.
But this convenience comes with a hidden danger. Buried in the microscopic lines of legal text that most people don’t read are introductory interest rates that skyrocket after the first few months. These hidden technicalities can doom unaware students to interest rates that are often more than 20 percent. A few late payments later, financial woes can easily compound into impossible debts. According to the Center for American Progress, between 1995 and 2004, the average debt of young adults rose 33 percent to more than $21,000.
This problem begs for a response, and thankfully at least one group is answering the call. The U.S. Public Interest Research Group announced last week plans to visit 40 college campuses across the country to educate students about the risks of signing up for new credit cards. The goal of U.S. PIRG is to provide students with the information they need to keep themselves safe from credit scams. Because many students are away from home and dealing with their own expenses for the first time, such advice is vital.
Although the University will not be one of U.S. PIRG’s stops, it can still find other ways to prevent students from plunging into debt. One method that the University has traditionally used to stop these companies from swindling students is a ban on sales promotion in certain places on campus, like the Diag. Even so, companies often just move across the street or into the Michigan Union, where they are allowed.
Banning these companies may be laudable, but it is hardly practical. Like the approach taken U.S. PIRG, the only practical response is an emphasis on education. The most vulnerable students are those who have never been given any advice on the subject. At freshman orientation, the University can hammer the point home and continue to offer education sessions for all students so that the perils associated with credit card scams are well known. If students opt for the free pizza anyway, they will only have themselves to blame.