LSA sophomore Alice-Kate Raisch doesn”t have a credit card and doesn”t plan on getting one until she gets her first real job after graduation. She feels the responsibility of having one is just too great.
- Paul Wong
- LSA Sophomore Jason Lartigue scans a credit card for a purchase at the Michigan Union Bookstore. The average student has over $2,000 in credit card debt.<br><br>BRETT MOUNTAIN/Daily
“My dad said not to have it yet because it could be trouble,” said Raisch.
But according to the National Foundation for Credit Counseling, Raisch is in the minority of students. According to the NFCC, 76 percent of undergraduate students had a credit card in 2000 and the average debt for those students was $2,743.
Despite these statistics, the University has been reaping profits of close to $1 million each year by assisting MBNA, a credit card lender.
For the past seven years, MBNA has paid the University for student phone numbers, addresses, and the rights to use the University”s logo on the cards, said Jerry Sigler, associate executive director of the University Alumni Association.
“We receive a certain amount for every account that is opened. It works out on average, over the past few years, to be a little over a million a year,” Sigler said.
The University uses the money in the athletic department, a loan fund to assist students in paying off credit card debt, several scholarships and alumni and student associations, Sigler said.
“A lot of it is based on what are the needs of a program this year based on what was done in the past,” Sigler said.
Though the money paid to the University goes to student related funding, the consequence of campus credit card soliciting could result in credit card debt for some students.
NFCC data reveals that 10 percent of undergraduate students owe more than $7,000.
“Sometimes (college students) don”t think that much about money. Like when somebody just says, “Oh you can use this card, pay it back whenever, take your time.” Easy money is very tempting,” said LSA junior Candy Carbajal, who said she has several credit cards and previous problems paying them off.
But MBNA spokesman Jim Donahue said students are more responsible with credit cards than their average customers.
“Our history with students is that they handle that card as responsibly or more responsibly than any of our other customers around the country.” he said. “Some people would like you to think that students cannot handle credit cards, our experience is quite the opposite. Students who have MNBA cards handle those cards responsibly.”
According to NFCC statistics, students do have less credit card debt than the average American household. But taking into account that students generally have little income, in many cases, close to 100 percent of students” yearly income is owed to credit card companies. This percentage is much higher than the percentage of income going to credit card companies from the average American.
Sigler said the fact that the overwhelming majority of college students have credit cards led the alumni association to the conclusion that students were going to have a credit card regardless of whether it was associated with the University. Therefore, the University is working with MBNA to allow students to have the best card to meet their specific needs.
“What we have concluded in our research is between 80 and 90 percent of students have credit cards,” said Donahue. “College students having credit cards is one of the learning experiences they have during their college careers, our goal shouldn”t be to prevent that or discourage that, but have a program to manage that. Working with MBNA we have developed these programs and they have developed credit limits and things like that.”
Many students are able to survive without a credit card or, if they have one, use it infrequently and do not find it a necessity of being a college student.
“I don”t use it, I just don”t spend that much,” said LSA Junior Alexis Wesaw, who has had a credit card for two years but rarely has a need to use it.
Donahue said MBNA is trying to educate students by distributing literature, giving students access to websites with financial planning, holding seminars and providing a toll-free number to answer customer questions. In addition to this, every student who is approved receives a welcome package with information on how to properly maintain their new credit card.
“In general we work closely with MasterCard and Visa to make sure that students have access to information. We will provide any assistance that the University requests,” Donahue said.
The University also offers financial assistance to help students deal with problems they may encounter with their student MBNA credit card.
“We”ve created a partnership that will help them and an emergency student loan fund funded by money we get from MBNA. This gives them a fund to help them get out of this problem. MBNA has also offered their credit card counseling service to help them get out of whatever financial difficulties they are in and help them get back on their feet,” Sigler said.
But all the information and education may not be enough to help students handle credit cards responsibly.
“I feel as though most college kids know. They see the information and they say, “Oh, I know that” but they don”t really think about it. I mean when you need money and you have access to it on a little card, you just use it,” Carbajal said.