Colleges Teaching Students About Dangers of Credit Card Debt


By MEGAN A. CONLAN

ANNAPOLIS (Sept. 22, 2008)—Much of what University of Maryland sophomore Samantha Link, 19, knows about the risks of getting into credit card debt she learned by watching "The Oprah Winfrey Show."

"I wish I could be more knowledgeable about it," said Link, who has a debit card and two credit cards, one of which she shares with her father, who manages their accounts.

As the level of debt among college students rises, even Congress is paying more attention to the credit card companies that market to this demographic, introducing legislation that would both make it harder for the companies to access students and for the students to qualify for credit.

In an attempt to reduce the financial dangers of acquiring too much plastic, some Maryland universities are taking a more active role in teaching students how to manage their credit before it becomes an issue. Optional or mandatory classes on financial literacy are being incorporated into their curricula and orientations.

The University of Maryland, College Park has recently added an instructional session on finances to its introductory college course for freshmen and transfer students.

"We are embarking this semester on a plan to begin talking to students about that whole financial responsibility," said Dr. Gerry Strumpf, the director of orientation at Maryland. "They need to think about saving - even if they don't make a lot of money."

Although most colleges at the university do not require their students to take the course, many freshmen opt to enroll in the class anyway.

"It's a very well-utilized course at the university," said Strumpf. "We've geared it to where students are developmentally right now."

The financial literacy portions of the class discuss credit scores and student budgets.

"The purpose is for them to know where to go should they get into financial trouble, or just to plan ahead," said Sarah Bauder, the university's director of financial aid. Bauder is one of the speakers leading the discussions on finances in the course.

Some students from past semesters experienced a taste of the financial literacy portion of the class during its development.

"We talked about how you can look up your name and see what your credit looks like," said Maryland sophomore Jessica Seaman, 18, who does not have a credit card yet but plans on acquiring one to pay for gas. "Then we just talked about the consequences of being in debt and the positives of staying out of debt."

Credit card companies find creative tactics to lure students into signing up for cards, such as contests and free T-shirt giveaways.

The University of Maryland restricts companies from soliciting students on its campus, except at sporting events. Frostburg State University and Towson University have banned companies from marketing on campus entirely.

At least one large credit card company said marketing on campus is not an issue.

"We restrict our marketing activity to students off campus and online," said Samuel Wang, a Citi spokesman. "We maintain no direct affinity relationships with the universities, either."

In 2004, more than 70 percent of students used a credit card to pay for textbooks, general school supplies, and food, said a 2005 study published by Nellie Mae, a student loan company. Clothing was another frequently charged expense.

"You know, it's just easier than carrying cash around," said Maryland junior Jeremy Messersmith, 19, who has two credit cards to pay for school supplies and other necessities.

Nellie Mae reported that in 2004, the average number of credit cards held by students was 4.09, with 43 percent of students having four or more cards to their name. That same year, the average student credit card debt was $2,169, up from $1,879 in 1998, said Nellie Mae.

"They leave with this incredible debt that they don't think about," said Strumpf, who believes that more education can help reduce these figures.

Other area schools offer programs similar to the one at Maryland.

Salisbury University requires freshmen to take a six-week course that discusses financial responsibility with regard to credit cards and student loans. Loyola College of Maryland also includes some financial education sessions in its orientation.

Towson University does not include any instructional sessions on managing credit during its orientation classes, but does host a fall program series which includes an educational event on building and managing student wealth and working on a budget.

"There's so much that students need to know," said Strumpf. "We have begun that process and it's very important."

Capital News Service contributed to this report.

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