New Credit Card Rules Aim to Limit Student Debt


October 6, 2009
by Scholarships.com Staff
The Federal Reserve Board proposed new regulations last week that would prohibit creditors from issuing credit cards to anyone under 21 without the consent of that applicant's parent or guardian, or proof that the consumer would be able to make the required payments on their own. Those rules would amend some of the provisions in the Credit Card Accountability Responsibility and Disclosure Act of 2009, a bill passed by Congress last May that, among other things, would hinder credit card companies from getting college students to sign up for offers at on-campus booths.

The Federal Reserve Board proposed new regulations last week that would prohibit creditors from issuing credit cards to anyone under 21 without the consent of that applicant's parent or guardian, or proof that the consumer would be able to make the required payments on their own. Those rules would amend some of the provisions in the Credit Card Accountability Responsibility and Disclosure Act of 2009, a bill passed by Congress last May that, among other things, would hinder credit card companies from getting college students to sign up for offers at on-campus booths.

You know you've seen it before - the free T-shirt that you probably wouldn't wear, but was appealing anyway because it was free. All you had to do was sign up for a credit card. An article in The Chronicle for Higher Education when the bill was first moving through Congress described college students as the most targeted population when it comes to new customers for credit card companies.

Critics of the bill then said that college students, who take on a slew of new responsibilities once they get on campus, should be treated as adults. And during a time when students are more apt to use credit cards to pay for college expenses, they shouldn't meet obstacles when using their credit cards for college expenses. According to a recent survey by student lender Sallie Mae, 84 percent of undergraduates have at least one credit card; 92 percent of those undergraduates use the cards toward college expenses. College students' average balances are more than $3,100.

So what's the bigger problem? Having access to credit to pay for college expenses, or preventing college students from accruing large sums of debt?

Credit cards should be used as the last line of defense, and ideally for emergencies only. There are many options out there for you to find money for college that have nothing to do with being faced with high interest rates and exorbitant fees. Do your research to apply for college scholarships and grants that would result in free money to cover your college expenses. Consider a part-time job on campus if you have the time and can balance work and college. And while not as desirable, investigate low-interest student loans to supplement your financial aid package.

If you need to use credit, make sure you're keeping within a manageable budget, and only charging as much as you'd be able to realistically pay off at the end of the month. The decisions you make now will matter post-graduation, and any decision involving opening a new line of credit should be approached with caution. Stick to one card if you need one, and if you find yourself in debt, pay off as much as you're able to each month until you're done. (Don't be using that card while you're trying to pay it off, though.) Browse through our site to see more tips on budgeting, how you can avoid mounds of credit card debt, and how to keep your credit card score healthy.

The new regulations would go into effect after Feb. 2010, but the public, credit card industry and others will have a chance to voice their opinions beforehand. Other rules proposed by the Board included:

  • Limiting high fees associated with subprime credit cards.
  • Prohibiting increases in a credit card interest rate during the first year after an account is opened, and increases in a rate that applies to an existing credit card balance.
  • Requiring creditors to obtain consumers' consents before charging fees for transactions that exceed their credit limits.

College is expensive, Scholarships.com is completely free. Pay for your college education with as much free college scholarship money as possible. By applying to all the awards you qualify for, you can be sure to not miss a single opportunity in paying for your college expenses - including tuition, fees, room and board. Get matched to college scholarships instantly and start applying today by conducting a free college scholarship search at Scholarships.com.

Discuss

Share your thoughts and perhaps thousands of students will benefit from your unique insight on the subject!



If you can read this, don't touch the following fields


 
The U.S. government set up a fake Michigan university as part of a sting operation to catch visa fraudsters. Agents of Immigration and Customs Enforcement (ICE) secretly established the University of Farmington, enrolling more than 600 students studying science and technology in a pay to stay” scheme. As a result, roughly 250 students have been arrested on immigration violations.

"U of Farmington" Fraudsters Prosecuted, Deported

December 10, 2019 4:35 PM
by Susan Dutca-Lovell
The U.S. government set up a fake Michigan university as part of a sting operation to catch visa fraudsters. Agents of Immigration and Customs Enforcement (ICE) secretly established the University of
 E-tail giant Amazon is now accepting applications to its Amazon Future Engineer Scholarship Program for students entering college in the fall of 2020. The scholarship program offers 100 current high school seniors from underserved and underrepresented communities across the country the opportunity to receive $40,000 scholarships to study computer science at a four-year college or university and a guaranteed paid internship offer at Amazon after the completion of their first year.

Amazon Offers $40K Future Engineer Scholarships

November 6, 2019 1:41 PM
by Susan Dutca-Lovell
E-tail giant Amazon is now accepting applications to its Amazon Future Engineer Scholarship Program for students entering college in the fall of 2020. The scholarship program offers 100 current high
In response to the NCAA's vote to allow athletes to profit from their names, images and likeness, Senator Richard Burr of North Carolina has proposed taxing those scholarships. Senator Burr tweeted: If college athletes are going to make money off their likenesses while in school, their scholarships should be treated like income. I'll be introducing legislation that subjects scholarships given to athletes who choose to 'cash in' to income taxes.

NC Senator Proposes Taxing of Athletic Scholarships

October 31, 2019 4:02 PM
by Susan Dutca-Lovell
In response to the NCAA's vote to allow athletes to profit from their names, images and likeness, Senator Richard Burr of North Carolina has proposed taxing those scholarships. Senator Burr tweeted:
Gucci is releasing a new line of... diversity undergraduate scholarships for students who are traditionally underrepresented in the fashion industry. The 1.5 million U.S. university college scholarship program is set to run for four years, targeting students who attend four-year universities. Special consideration will be given to those residing in Atlanta, Chicago, Detroit, Houston, Los Angeles, Miami, New Orleans, New York, Philadelphia, San Francisco, Toronto and Washington, D.C and/or for those who plan to attend or are currently attending a Historically Black College and University (HBCU).

Gucci Gaffe Results in Green for Grads

October 8, 2019 2:28 PM
by Susan Dutca-Lovell
Gucci is releasing a new line of... diversity undergraduate scholarships for students who are "traditionally underrepresented in the fashion industry." The 1.5 million U.S. university college
Not every student who goes to college completes their degree, much less finishes it within the normal four-year time frame. The Texas of A&M University has spent years working to re-enroll students who stopped out of college for a year or more, and may have found a solution in partnering with ReUp Education.

Texas A&M Working to Re-enroll College Stopouts

September 26, 2019 2:15 PM
by Susan Dutca-Lovell
Not every student who goes to college completes their degree, much less finishes it within the "normal" four-year time frame. The Texas of A&M University has spent years working to re-enroll students
 Photo credit: Jared Ames

A new PBS documentary exhibiting prison education, titled College Behind Bars is set to air on November 25 and 26. The four-part series documents the journeys of dozens of incarcerated men and women as they pursue college degrees in the Bard Prison Initiative - deemed one of the most rigorous prison education programs in the United States, according to Inside Higher Ed.

PBS Airs Documentary About Higher Ed in Prison

September 18, 2019 11:53 AM
by Susan Dutca-Lovell
Photo credit: Jared Ames A new PBS documentary exhibiting prison education, titled "College Behind Bars" is set to air on November 25 and 26. The four-part series documents the journeys of dozens
The federal government discharged more than $43 million in student loan debt for former students of recently closed for-profit colleges. Students who attended programs operated by Education Corporation of America, Dream Center Education Holdings, Vatterott College and Charlotte School of Law will be able to qualify for a full discharge of their federal loans if they were enrolled when their college closed or withdrew within 120 days of the official closure date and didn’t transfer to another institution, according to Inside Higher Education.

$43M in Loans Forgiven for Students of Closed Colleges

September 6, 2019 9:18 AM
by Susan Dutca-Lovell
The federal government discharged more than $43 million in student loan debt for former students of recently closed for-profit colleges. Students who attended programs operated by Education
College Board is ditching its previous plan to capture socioeconomic information from students with a single score - also known as an adversity score - when scoring their SAT college admissions test. The score would have taken into account a student's socioeconomic background and the neighborhood in which they grew up.

College Board Backpedals - No Adversity Score to be Added

August 30, 2019 2:05 PM
by Susan Dutca-Lovell
College Board is ditching its previous plan to capture socioeconomic information from students with a single score - also known as an "adversity score" - when scoring their SAT college admissions
Female-only college and university STEM programs are coming under fire for male discrimination as they attempt to redress gender imbalance in fields such as computer science and engineering. The U.S. Department of Education launched more than two dozen investigations into higher education institutions nationwide - including UC Berkeley, UCLA and USC as well as Yale, Princeton and Rice - which offer female-only scholarships, awards and professional development workshops.

Female-Only Scholarships Under Fire In Higher Ed

August 20, 2019 4:57 PM
by Susan Dutca-Lovell
Female-only college and university STEM programs are coming under fire for male discrimination as they attempt to "redress gender imbalance" in fields such as computer science and engineering. The