College 101: Beware of anybody bearing a credit card for you
During the first couple of weeks of school, there will be a flood of them.
They will be armed with free gifts and promises to fulfill any financial shortcomings you might experience as a new student.
They are credit card solicitors, and they probably anticipate the curious and unexpecting freshmen class just as much as the fly-guy, career student.
“Credit card companies go on college campuses looking for students to hire. They’ll go to fraternities and offer them $20 for every student they get a card,” said Mary Sites, director of the Consumer Credit Counseling program in Canton, Ohio. “I don’t think they should be allowed on universities, but there’s no law against it.”
Perhaps the biggest appeal is the ability to conjure up a nice collection of cups and mugs, basketball hoops, dry erase boards, flashlights and all types of gadgets and knickknacks to clutter your dorm room or apartment for free.
But the few seconds it takes to fill out a form is minuscule compared to the long-lasting damage it could inflict on a student’s credit report-something that could haunt you when you buy a car, apply for a card, or sign for an apartment or house. Good or bad, your actions will be reflected for at least the next seven years for credit, and 10 years for bankruptcy.
“It’s sort of sad. A lot of these students have trashed their credit history before they even get out of college,” said Sites. “The companies are thinking that the kids will get the cards and stay on track and have established credit when they get out, but that’s not usually what happens.”
Sites said that nearly 20 percent of her cases are students from Kent State University, and she has about 1,000 clients. Sites estimates that the average debt for a college student is probably about $5,000, compared to the $8,000 or $10,000 average for a working adult.
“The students will get the credit cards. There’s no doubt about that,” said Sites. “When you are a college student, you don’t have a lot of money, so it’s very tempting.
“If the client or student would sit down and go over their budget, and the credit card company could tell them what their monthly payment would be, they can work that into their budget. Then they’ll realize that if they charge over that amount, they wouldn’t be able to afford their monthly payment.”
That rarely happens, though, and swiping the plastic card is just one of the bad habits college students can get into. Sites has seen a steady increase in the popularity of check-cashing establishments as well.
“You get an advance on your paycheck when you don’t have enough money, and they actually give you the money for your paycheck,” said Sites. “You have to pay them back the next week, but that’s not possible and then you can’t get out of it. You’re paying double. It’s a real vicious circle, and they get all of these fees on top of it.”
Getting out of debt is usually the hard part. Although it depends on how much students are paying, Sites said that in most cases, it takes about two to four years to pay off the college-accumulated debt. She expects that amount of time to rise in the next year or so because of the hit the economy has been taking.
If parents are not able to help, students have other alternatives. Services such as Sites’ are free of charge, and their main concern is showing students how to correct the debt and create a history of making payments. There is no way to avoid paying-most companies will hunt you down.
Paying the debt off can be done, and maybe it is a valuable lesson to be learned. “I’m trying to pay it off now,” Wendy Priah, 26, a University of Akron employee and recent graduate, said of her debt. “I paid all of them off except for one, so I am proud of myself. I just paid a lot of them [credit cards] off and closed them.”
Her advice: “If you absolutely have to have one, just get one. Students have enough debt with student loans and that puts you in extra debt you don’t need.”
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