Study Documents Student Credit-Card Debt; Author Says Colleges Share Blame
By BETH McMURTRIE
WashingtonCredit-card companies unfairly prey on students while college administrators look the other way, and even profit from the arrangements, according to a study by a Georgetown University professor.
Robert D. Manning, a visiting professor of sociology, said Wednesday that he was stunned to find how pervasive credit-card debt was among college students. Most troubling is that some students are using student loans or private debt-consolidation loans to pay credit-card bills.
"I've been appalled by how little interest there is from administrators," said Mr. Manning, who is developing a financial-literacy program for students and plans to market it through a non-profit organization. Mr. Manning said campuses were far more likely to sponsor programs on AIDS and sexually transmitted diseases than on managing finances, even though credit-card debt is a widespread problem.
The study was released Tuesday by the Consumer Federation of America. It is based on more than 300 interviews and 400 responses from students at Georgetown, American University, and the University of Maryland at College Park.
Credit-card companies often pitch their services under the guise of financial independence and freely give cards to students who have little or no income, Mr. Manning said. Peer pressure and the high cost of education also make credit cards appealing to students.
About 70 per cent of undergraduates at four-year colleges hold at least one credit card. From 1996 to 1997, the average credit-card debt among undergraduates rose from $1,879 to $2,226, according to the National Student Loan Surveys sponsored by Nellie Mae.
To pay off their bills, Mr. Manning found that many of the students took on extra jobs and neglected their academic work. Those deeply in debt sometimes dropped out, filed for bankruptcy, or turned to their parents for help. Some stayed afloat by using student loans to pay off their debt.
Colleges often profit from relationships with credit-card companies. Visa, MasterCard, and others frequently sponsor college programs, finance student activities, or rent space on campus to pitch their services to students. Colleges that allow credit-card companies to use their logo typically get a percentage of every charge made on that account.
Mr. Manning encouraged colleges not to allow on-campus solicitations, a step that several institutions have already taken.
Stephen Brobeck, executive director of the Consumer Federation of America, said Congress was considering a proposal that would allow credit cards to go to people under 21 only if they were financially independent or had parental approval.
"All colleges should follow the lead of a few in greatly restricting access to credit-card marketers, and also creating effective programs that freshmen are encouraged to participate in," Mr. Brobeck said.
Dan Wackerman, a Georgetown spokesman, said college administrators should be concerned about credit-card debt but should not be expected to solve the problem themselves.
"I don't think either the blame or the ultimate resolution of this issue will rest solely with universities," he said. "I think it will be a shared responsibility."