Some Students Get Hard Lessons in Credit

On many college campuses, credit card solicitations are as much a part of the back-to-school scene as pep rallies and sorority and fraternity rush week.

Applications are pinned to bulletin boards, passed along at bookstores or handed out from tables set up in student centers and cafeterias--along with free T-shirts and other enticing trinkets.

Credit card companies love doing business with students because of their immense customer loyalty.

“You give a college kid a credit card and 15 years later they still have that credit card,” said Howard Dvorkin, president of Consolidated Credit Counseling Services, a nonprofit service in Fort Lauderdale, Fla.

“It’s a profitable market, and the risk factor is generally low,” Dvorkin said. “No. 1, the balance [limit] they give to students is relatively low, and No. 2, mommy and daddy will bail the student out if the card goes into default.”

But that’s the downside of giving credit cards to students, critics say.

While credit cards offer students a convenient way to pay for school supplies and handle emergencies, while establishing a credit history, a growing number of students are graduating with a mountain of debt.

A handful of colleges and universities concerned about student debt have banned credit card marketing. But nearly three-quarters of colleges and universities allow it.

While most students are conscientious about repaying debts--nearly 40% pay off their card balances each month, according to the Public Interest Research Group in Washington, D.C.--even the most responsible student can get into serious trouble.

For all the credit card companies busily soliciting on campus right now, there is also an army of consumer groups quick to offer recommendations for students and their parents for managing debt.

CCCS, for example, offers a pamphlet, “Budgeting 101: Your Money Guide for Getting Through School,” free through its Web site (https://www.debtfree.org) or by calling (800) SAVE-ME2.

Useful information also can be found on the Web sites of other groups, including Public Interest Research Group (https://www.pirg.org) and Nellie Mae (https://www.nelliemae.org).

In addition, the nonprofit National Foundation for Consumer Credit in Silver Spring, Md., welcomes parents and students to drop in to any of its offices for budgeting tips and counseling, free of charge or for a nominal fee. To locate the nearest office, check out the Web site (https://www.nfcc.org) or call (800) 388-2227.