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The Credit Card Nation Begins in College

by Amy Hartlaub, Executive Assistant

The results of the first qualitative study to explore the issue of student credit card debt and its social consequences present a dismal picture. Increasingly, students are relying on credit cards as a form of "financial aid," resulting in not only economic difficulties, but social and emotional problems that are rarely addressed.

The study, entitled "Credit Cards on Campus: Costs and Consequences of Student Debt," was independently directed and financed by Dr. Robert Manning, a sociology professor at Georgetown University. Manning conducted over 350 interviews and sent out over 400 questionnaires to undergraduate students at American University, Georgetown University, and the University of Maryland. Over 50 graduate students were also interviewed in order to provide additional data.

Although the issue of student credit card debt is not a new one, the results of the study reveal that the severity of the problem has escalated dramatically in recent years. Varying economic and social factors within higher education have contributed to this phenomenon, perhaps the most obvious being the skyrocketing cost of tuition itself. With colleges and universities receiving less federal aid, students and their families have been forced to absorb the difference through dramatic tuition increases. In turn, the dependency on not only student loans but credit cards themselves to help finance a degree has become a normal aspect of the college experience for many students.

Perhaps the primary factor in the growing problem of student credit card debt is what the banking industry likes to call the "democratization" of credit. Well aware of the huge profits to be made off of younger Americans, credit card companies have increasingly targeted college students in their marketing efforts. Even unemployed freshman students can qualify for a credit card without parental consent. Manning's study analyzed the aggressive marketing strategies of credit card companies to the student population and discovered that the promotion of credit card use permeates college life as never before. Advertisement campaigns include everything from placing promotional materials in orientation packets and bookstore inserts to distributing application materials in dorms, classrooms, and student centers. Such intrusive marketing tactics help condition students into believing that having a credit card is as basic a part of the college experience as attending class. Through his research Manning found that it is surprisingly easier for an unemployed college student, without the consent of a parent, to qualify for a major credit card than a low- or moderate-income worker.

Results from Manning's pilot study and interviews proved inconsistent with what credit card companies have been preaching to the public. While the credit card industry insists that the student market is strong, there are serious questions regarding the methodology of the research cited by the credit card industry to support this claim. Foremost, industry research ignores the fact that students are increasingly forced to take out federally insured student loans in order to pay off credit card debt. This "paying Peter with money from Paul," as Manning explains, is a key reason why rising credit card debt is underreported by industry research data. Other fundamental problems with the methodology include comparability issues such as not discriminating between public and private college students, as well as the time of year industry questionnaires are distributed. Manning also found that students who drop out of school due to serious credit card debt are not factored into the industry's numbers, thereby making the situation seem much more stable than it truly is.

Another disquieting trend is the emerging "marriage of convenience" between credit card companies and universities. The study found that college and university administrators are not only accommodating when companies come knocking, but are actually entering into profitable business ventures with them. By signing exclusive licensing agreements, companies are allowed to use college insignias on their credit cards, advertise at high profile athletic events, and are given access to student and alumni mailing lists. In return, the educational institutions receive a profit.

In addition to the economic repercussions of credit card debt, Manning documented social consequences such as emotional distress, depression, diminished academic performance, loss of scholarships and other forms of financial aid, job rejection, and even suicide. Manning's findings show more suicides resulting from extreme student debt than previously believed. He hopes the results of his study will bring the necessary attention to the severe social consequences resulting from credit card debt among students and will catch the attention of both the industry and public policy officials.

So far, the results of the "Credit Cards on Campus: The Social Costs of Student Debt" study have attracted widespread attention by media outlets, consumer advocates, and even national legislators. ABC News, CNN, Good Morning America, and NPR have all run segments on the study, and U.S. News and World Reports and Businessweek have focused on the problem of rising student credit card debt in recent articles. This past fall, U.S. Congresswoman Louise M. Slaughter introduced legislation to the House of Representatives based largely on the results of the study. The act, entitled "The College Student Credit Card Protection Act," seeks to prevent credit card issuers from taking advantage of college students by curtailing unrequested solicitation to students, placing limits on the amount of credit a student may receive without parental approval, and prohibition of more than one credit card account for any full-time college student without independent income. Senators Edward Kennedy and Diane Fienstein also utilized findings from the study and have introduced the "Consumer Bankruptcy Reform Bill" to the Senate.

With the aid of Consumer Credit Counseling Services, Manning has set up a website to help those who wish to improve their financial literacy by learning more about the credit card industry.

As stated on its homepage, the three main goals of the "Credit Card Nation" website ( are to document the profound impact, both good and bad, of consumer credit and how changes in both technology and financial services affect the consumer; monitor the marketing campaigns of the credit card industry and how access to credit can be both beneficial and harmful; and educate consumers about the most effective use, potential hazards, and unanticipated abuse of credit. As the results of the study "Credit Cards on Campus: The Social Costs of Student Debt" clearly illustrate, there are many student consumers who can benefit from the information.