Credit card companies – not irresponsible borrowers – are to blame for the debt that college students rack up, according to ABC’s “Good Morning America.” Consumer correspondent Elisabeth Leamy reported June 26 that lenders use “deceptive tactics” to “lure college students in” and even tried to link suicide to that debt.
“Dozens of schools including Georgetown University here have banned credit companies from their campuses over the past decade. So the card companies have gotten more creative – some say sneakier – in how they lure students in,” reported Leamy.
Just how “sneaky” have they gotten? Credit card companies are using the “deceptive tactic” of giving them an irresistible offer: sandwich coupons.
Leamy showcased a student from the University of Illinois who fell victim to this enticing trap. The student took the free coupon, “but when she got to the restaurant, just outside the University of Illinois, Chicago, campus, there was a catch. She had to apply for a credit card in order to get the free lunch.”
Leamy also advertised a documentary called “Maxed Out,” which included the mothers of two college students who, the film said, “killed themselves over credit card debt.” A “Good Morning America” graphic asked, “Are companies preying on students?”
Only Nessa Feddis of the American Bankers Association pointed out that college students, most of whom are 18, should be responsible for themselves. “At 18, people are allowed to enter into contracts, they’re allowed to get married, they’re allowed to vote, they’re allowed to sign up for the Army,” she said. “They should be allowed to have a credit card and not have the government intervene.”
But rather than encouraging self-discipline and responsible borrowing, Leamy turned to government regulation as the solution.
“One bill before Congress would try to address the issue by capping credit card limits for students at $500 or 20 percent of the student’s income,” said Leamy. “Another would set limits for people under 18. They would have to prove that they have an independent source of income to repay the card or that they have taken a credit counseling course.”