[Congressional Record Volume 145, Number 164 (Thursday, November 18, 1999)]
[Extensions of Remarks]
[Page E2439]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               COLLEGE STUDENT CREDIT CARD PROTECTION ACT

                                 ______
                                 

                     HON. LOUISE McINTOSH SLAUGHTER

                              of new york

                    in the house of representatives

                      Wednesday, November 17, 1999

  Ms. SLAUGHTER. Mr. Speaker, on October 25, John Duncan of Tennessee 
and I introduced H.R. 3142, the College Student Credit Card Protection 
Act. Madison Avenue and the credit card companies have convinced our 
college students that getting a credit card is necessary for a fun 
college experience. But upon graduation, many of these young people 
find themselves buried in debt. Just recently, the House recognized the 
need to educate young people on this issue by passing a bill to 
encourage high schools to teach financial literacy, including credit 
education. College by college, state by state, this issue is being 
recognized as a serious problem that needs to be addressed.
  A recent report found that one-fifth of the Nation's college students 
are carrying credit debts of more than $10,000. Seventy percent of 
undergraduates at 4-year colleges possess at least one credit card. One 
19-year-old sophomore student in the Rochester, NY area who had no 
income recently attempted to declare bankruptcy; he had accumulated a 
stack of credit cards and owed the credit card companies $23,000! In 
Knoxville, TN, one college student ran up $30,000 in credit card debt 
in just 2 years. Students are snowballing into debt through the 
extension of unaffordable credit lines, peer pressure to spend, and 
financial naivete. Low minimum monthly payments and routine credit 
limits hikes add to the seductiveness of plastic.
  Even though many students with credit cards have no income to pay the 
bills, credit card companies are aggressively marketing their cards to 
college students. Credit card companies set up tables during 
orientation week and outside college lunchrooms, advertising free gifts 
such as t-shirts and mugs, to sign up as many students as possible. 
Most of the time, all that is required is a student identification 
card. For many students, they experience problems when they cannot 
afford to make payments on their credit cards, which ruins their credit 
ratings before they have even entered the workforce. While many college 
students are adults, responsible for the debt they charge, the credit 
card industry's policy of extending high lines of credit to unemployed 
or underemployed students needs to be examined.
  This bipartisan legislation would compel credit card companies to 
determine before approving a card whether any prospective customer who 
is a traditionally aged full-time student, can afford to pay off the 
balance. This bill would limit credit lines to 20 percent of a 
student's annual income without a cosigner. Students could also receive 
a starter credit card with a lower credit limit, allowing increases 
over time if prompt payments have been made. Another provision would 
eliminate the fine print in credit card agreements and solicitations, 
where fees and penalties are hidden. This print would have to be 
enlarged. Finally, parents would have to agree in writing to increases 
in the credit limit of cards which they have cosigned.

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