Scott BresslerHave you awoken to your land phone ringing loudly in the morning, only to pick it up sleepily and hear a credit solicitor on the other end?
You are certainly not alone. More than ever, credit card companies are tapping the lucrative market of college students.
According to 2001 statistics from Nellie Mae, a student loan company, the percentage of undergraduate students possessing at least one credit card had risen to 83 percent, a 24 percent increase since 1998. With credit card marketing becoming increasingly aggressive, the numbers have continued to climb.
Stuart Greenbaum, a professor emeritus and the former dean of the Olin School of Business, attributes credit marketers’ attraction for college students to the manner in which college students handle their balances.
“Credit users and card users that borrow and have credit balances are particularly profitable,” he said. “[Credit cards offer] convenient access to credit, something [college students] are using, and they can make payments conveniently. They don’t have to maintain a cash balance,” he said.
While credit cards can be quite convenient, they can also pose serious risks of accumulating debt, something to which college students are especially prone. Rachel Grimes, a junior, has certainly experienced this, having accumulated hundreds of dollars in debt in the past.
“With credit cards, it just feels like they’re giving you money to spend and when you need to buy stuff, the credit card is right there to provide you with money,” she said. “But you forget that since you don’t have an income, you’re not going to be able to pay off that money later. So then you start accumulating debt.”
Grimes elaborated, saying that credit cards were also frustrating because they force students to pay long-term debts on items that might only have a short lifespan.
Grimes is certainly not the only one who has been affected by this vicious cycle of credit card debt. Greenbaum agreed that overspending is a common problem for college students.
“Spending beyond their ability to pay is where young people get into trouble. [Credit cards] are so convenient that budgetary discipline tends to be eroded,” he said.
Many universities across the country make it even more difficult for students to avoid the lure of credit cards by forming multimillion-dollar partnerships with credit marketers, enabling them to come to campus and directly solicit. While this is not negative in itself, the schools do not inform students of credit card risks before students sign the dotted line.
Washington University does not form such partnerships that target students and the only credit card that the University solicits is the Washington University credit card for alums.
Bill Witbrodt, director of financial services, thinks that this is a positive thing.
“I think that deciding whether or not to get a credit card is a process that takes quite a bit of thought,” he said. “When colleges send credit card vendors to campus, [they] say no interest for the first six months. But after the first six months, you have a debt with 21 percent or 22 percent interest. [Those are] the kind of vendors we discourage.”
So that students can have a better idea of how credit cards affect their lives, Witbrodt mentioned a new program, which he mentors, called “What’s my Score?” The program, sponsored by the Alpha Kappa Psi business fraternity, is designed to provide credit advice to students and to let them know how their credit score impacts their futures.
While there have been initiatives in the past to educate students on the importance of using credit properly, Witbrodt mentioned that this is the first big push to educate students in this area. He said that the program will most likely continue in the future because of the valuable advice it provides.
“[Your credit score] is almost as important as your GPA. If not managed, you can’t get a new car or home,” he said.
But Witbrodt does not think that credit cards are harmful, just that they must be handled properly.
“I am not against students having a credit card, but I want the students to have a thorough understanding of what they’re getting into when they get one,” he said.