A bill recently introduced in the California State Assembly would stop credit card companies from using free giveaways on college campuses to recruit new customers.
Assemblyman Joe Coto (D-San Jose) introduced AB 262, the College Student Credit Protection Act, which would prohibit certain credit card marketing techniques on college campuses. The bill has been referred to the Committee on Higher Education and is scheduled for a hearing on April 17.
The bill is a response to recent findings that credit card debt is rising among students. Student lender Nellie Mae found that 75 percent of U.S. college students have credit cards and that their debt increases over their time at school, doubling from freshman to senior year.
Student Public Interest Research Groups found that 71 percent of students fail to pay off their monthly credit card balance and accumulate debt, compared to 55 percent of all credit card holders.
There are three parts to the bill, which would prohibit companies from distributing gifts to students for filling out credit card applications. If the legislation passes, the California State University Board of Trustees and the California Community Colleges Board of Governors would have to disclose all special deals they make with banks in the future.
The bill would also urge the UC Board of Regents to revise its current policy on the on-campus marketing of credit cards to students, as well as recommend that the regents remove all exemptions they have listed in their policy and to disclose their exclusive deals on a yearly basis.
Quan Nguyen, a spokesman for Coto, said in an e-mail that the state Legislature cannot force the regents to adopt legislation because of the university’s constitutionally guaranteed autonomy. The bill can only urge the regents to adopt the policies.
Some students said that the free gifts can definitely facilitate a pathway toward eventual debt.
“”I have never met a person my age who doesn’t like free stuff,”” John Muir College freshman Beth Swift-Taylor said. “”But when credit card companies give away free stuff, it isn’t really that free. Getting a free tote bag doesn’t make up for the fact that most people will get themselves into tons of debt and ruin their credit, messing up their chances to buy cars and homes in the future.””
Other students said that personal responsibility issues are the ultimate causes of debt.
“”Credit cards make it a lot easier for students to go into debt, true, but it still requires a lot of irresponsible buying to get there,”” Earl Warren College freshman Scott Pierson said. “”The obvious answer is to say, ‘We need more education about fiscal responsibility,’ but honestly, I think that university students should be able to figure this out for themselves.””
So far, there is no formal opposition to the bill, and groups such as the California State Students’ Association, the California Postsecondary Education Commission, and the American Federation of State, County and Municipal Employees are registered in support.
If passed, the bill would go into effect Jan. 1, 2008.