WASHINGTON, DC – The U.S. Senate today approved legislation that strengthens oversight of the credit card industry. The legislation includes measures cosponsored by U.S. Senator Bob Casey (D-PA) that place restrictions on marketing credit cards to college students and direct the Federal Trade Commission to study new technology to combat crime at automated teller machines.
“Students today who work hard to obtain a college degree will enter the workforce saddled with thousands of dollars in loans, and thousands in credit card debt on top of it,” said Senator Bob Casey (D-Pa.). “I am pleased that Congress has acted to require disclosure of marketing tactics that target struggling college students and add to the burden of debt that follows them out of school. The passage of the Credit Card Accountability, Responsibility and Disclosure Act is a victory for consumers that will provide a measure of relief and security.”
“Colleges should not be encouraging their students to sign up for products with high interest rates and fees that can get them bogged down in debt. Young consumers often do not have the knowledge and experience to manage their credit wisely and as a result can get into deep financial trouble that can stay with them for decades,” Senator Dianne Feinstein (D-CA) said. “This amendment installs common-sense restrictions to protect college students and all young consumers from deceptive practices.”
“A free T-shirt is never worth starting off adulthood with ruined credit. College students are bombarded with offers on campus that seem like they’re getting something for nothing, but applying for a credit card requires forethought and responsibility,” said Senator Robert Menendez (D-N.J.). “We want to end these giveaways that end up trapping students. We also want to know when colleges and universities have deals with credit card companies that allow them to push their plastic on consumers without the wherewithal to responsibly manage their credit. This is an important part of credit card reform, and it has a rightful place in this legislation.”
“Far too often young adults don’t read the fine print of credit card offers and rack up huge debts that follow them throughout life. As a father of two daughters in college, I’m constantly making sure my girls aren’t signed up for any of the many credit card offers targeting college students,” said Senator Bob Corker (R-Tenn.).
“This amendment reforms credit card marketing practices aimed at college students so the terms are fair, transparent, and more easily understood by the consumer. It would also commission a study to fully examine the problem of student credit card debt so we can help make sure these young Americans aren’t burdened and hampered by excessive debt.”
“I have been concerned with how credit card companies target our young consumers,” said Senator Herb Kohl (D-Wis.). “Credit card companies advertise on college campuses across the country, sending card applications to newly enrolled college freshmen, giving away t-shirts for a credit card application and even mailing students applications to their on-campus mailbox. This amendment will enable young consumers to gain access to credit in a responsible manner.”
The Feinstein-Corker-Casey-Grassley-Kerry-Levin-Menendez-Kohl amendment protects students from common credit traps. The measure:
• Prohibits credit card companies from offering gifts to students in exchange for completing credit card applications;
• Requires universities to publicly disclose marketing agreements made with credit card issuers;
• Requires credit card companies to report how much money they are giving to schools and alumni associations through these agreements and what they receive from the universities in exchange; and
• Calls upon the Government Accountability Office to study the extent of these deals and the overall impact on student credit card debt.
According to a report released earlier this year by Sallie Mae:
• 84 percent of all undergraduates have at least one credit card;
• The average student has more than four credit cards;
• Nine out of 10 college students use credit cards for direct education expenses, and 30 percent charge some tuition to their cards;
• The average balance for these students is $3,173. Eighty-two percent of college students carry a balance each month, which requires them to pay finance charges.
• Nearly one in five college seniors holds $7,000 or more in credit card debt.
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