Students looking to apply for their first credit card may encounter some new obstacles, due to recent credit card legislation signed into law by President Barack Obama.

On May 22, Obama signed the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (CARD) in an effort to protect American consumers from unfair practices of credit card companies. Though it may stop hidden fees and sudden rate hikes, it could be an obstacle toward the goal of financial independence for many college students.

In a White House press release, Obama wrote that the new legislation will help protect consumers.

“With this new law, consumers will have the strong and reliable protections they deserve,” he wrote. “We will continue to press for reform that is built on transparency, accountability and mutual responsibility — values fundamental to the new foundation we seek to build for our economy.”

Though Obama remains optimistic that the new policy will help consumers, the law contains stipulations that may make it more difficult for students to gain financial independence.

Title III of CARD requires that new credit accounts for anyone under the age of 21 must have a signature by a parent or guardian, or that the student completes a financial literacy course. It also requires full disclosure of all agreements made regarding marketing and distribution of credit cards to students by card issuers and universities.

The legislation is designed to assist credit card holders to make informed and safe financial decisions during this current economic crisis by banning unfair rate increases, unfair fee traps and retroactive rate increases.

But Jerry Sigler, vice president and chief financial officer of the University’s Alumni Association, said he thinks the signature provision of the act creates an obstacle for college students looking to gain financial independence with a credit card because it would make it more difficult for students to establish independence away from home. The Alumni Association offers credit card services for University students and alumni through the Bank of America.

According to a 2004 by Nellie Mae survey — a financial aid branch of the largest student loan company Sallie Mae — 76 percent of students enter college with a credit card, which is an 8-percent decrease from their last survey in 2001.

Sigler said he thinks this new law will make the numbers go down even further.

“In general, fewer freshmen will get to campus and have credit cards,” he said. “(Having a credit card) seems like kind of the basics of learning to budget, the college experience and becoming an adult.”

LSA junior Renard Monczunski said he feels like in the short term, the new law will hurt young people more than help them.

“Many people want financial independence,” he said. “We need apartments and cars soon, and that’s going to hurt that. Financial aid doesn’t work fast enough for some people.”

Another signigicant feature of the legislation is that it requires that credit card issuers make all terms of use obvious in the paperwork. According to the press release and the stipulations of the act, this will help protect students against university affinity agreements with credit card companies.

An affinity agreement is a contract between credit card companies and universities in which the school provides student contact information to credit companies in return for a portion of the revenue each time a student opens a new credit card.

Affinity agreements often market credit cards to students with unfair and unreasonable policies advertised in an enticing way, taking advantage of students.

The University’s Alumni Association has an affinity card agreement with credit cards from the Bank of America. The Alumni Association gives student names, class years, home addresses and campus addresses to the bank.

LSA senior Sara Achauer said she does not agree with the University giving out her personal information to banks.

“It’s a pretty big breach of trust,” she said. “You trust the University because you have to give them your information to go here.”

The new legislation requires affinity-card contracts to be more clear in their language regarding what students are actually signing up for.

But according to Sigler, this is something the Alumni Association already does.

“The portion of legislation that focuses on affinity cards is just to publicize openly, which we already have (done),” he said.

Sigler added that the affinity agreement program at the Alumni Association is also primarily focused on alumni, so the new restrictions on age will not affect its revenue from the affinity-card contracts.

The money earned by the affinity agreements is about $2 million, only $80,000 of which comes from student accounts. The remainder of the revenue comes from alumni accounts, Sigler said.

According to Sigler, this money helps fund student leadership programs, scholarships, other student resources and general support of the Alumni Association.

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