September 5, 2002
Ed Mierzwinski or
Ellynne Bannon, (202) 546-9707
Shows Credit Card Industry Continues Aggressive Marketing
Of Overpriced Credit Cards To Students, Exacerbating Their
Student Loan Debt Problems
at a Senate Banking Committee hearing today on aggressive
credit card industry marketing to college students confirms
the findings of reports by the state PIRGs that many college
students, already at risk from massive student loan debts,
have their problems worsened by deceptive credit card offers.
PIRG surveys of campus credit card marketing have documented
that students who apply for cards at campus tables, in return
for candy, trinkets or T-shirts, have more cards, higher balances,
and worse over-the-limit and delinquency problems than other
often debt burden becomes a ball and chain for student borrowers
after graduation. Many student borrowers are taking on unmanageable
levels of debt to finance a college education." said
Ellynne Bannon, the State PIRGs' Higher Education Advocate.
Bannon co-authored a March 2002 report on rising student loan
debts, based on an analysis of Department of Education data.
That study, "The
Burden of Borrowing," found the following:
percent (39%) of student borrowers now graduate with unmanageable
levels of debt, meaning that their monthly payments are more
than 8% of their monthly incomes. In 2000, the average student
loan debt for the 64% of full-time student with debt graduating
from a four-year school was $16,928.
percent (41%) of all graduating seniors carried credit card
averaging $3,071. More of those students (48%) with student
loans had credit card debts, which averaged $3,176.
need to take aggressive action to police the credit card industry,
which has been under intensive regulatory and legal scrutiny
for its marketing practices in general, but wants to pitch
cards indiscriminately to students who may not have jobs or
ability to repay and who may already have serious student
loan debt problems," said state PIRG consumer program
director Ed Mierzwinski. "Yet, even though the Congress
has moved swiftly to take up the credit card industry's draconian
bankruptcy bill, it has taken no action to rein in unfair
credit card marketing practices."
PIRGs urged Congress to do the following to stop unfair credit
the Dodd legislation, S. 891, to require credit card companies
to require that credit card companies either require the same
terms of college students they require of everyone else-either
ability to repay a card or a co-signer - or, at least, proof
that the student has passed a qualified debt education course.
the broader House proposals, HR 1052 and HR 1060, introduced
by Rep. LaFalce (D-NY), to rein in unfair credit card practices.
the credit card company-driven bankruptcy conference report,
which hurts victims of the recession without addressing any
of these problems.
PIRGs also recommended that campus administrations establish
mandatory debt education programs, free from credit card company
interference, and also ban or strictly regulate credit card
marketing on campus.
commend Sen. Sarbanes for holding this hearing," Mierzwinski
concluded. "We hope to work with him to ensure that college
students get a fair deal, not a raw deal, from unscrupulous
credit card companies.
PIRG is the national lobbying office for the state Public
Interest Research Groups. State PIRGs are non-profit, non-partisan
public interest advocacy groups.
Burden of Borrowing" (2002) and other state PIRG
reports on rising levels of student loan debt is available
Credit Card Trap" (2000) and other state PIRG credit
card reports and consumer fact sheets are available at http://www.truthaboutcredit.org
See also "The Campus Credit Card Trap" (1998) at
PIRG summary of recent regulatory and legal actions against
credit card companies is available at http://www.pirg.org/consumer/#br