Student credit card debts have come down post CARD act – but is it enough

Credit card companies aggressively marketed their products and set up booths in colleges and attracted students with freebies for signing up, but that was prior to the CARD Act. After President Obama endorsed the CARD Act in May 2009, things started getting more and more difficult for card companies. Earlier, they would freely market their products on the campuses. Even the institutions were not spared as card issuers lured institutions into marketing agreements that generated around $84.5 million in revenue for these colleges and alumni associations during 2009, according to an article published in USA Today recently.

Some of the most prestigious educational institutions such as Cornell University had also got into these agreements with the lenders. In the same article in USA Today, it was also reported that Cornell had even provided free tickets to the employees of Chase in an earlier marketing agreement, in order to facilitate the employees of this card company to man kiosks, which distributed freebies to students to entice them to sign up.

Although, these deals certainly benefited the alumni associations financially, these were certainly not something that offered a good deal for students who did not have a source of income, stated Ruth Susswein from Consumer Action. This led to many students earning a huge debt along with their degrees.

However, after the entry of the CARD Act, things began to change as there were a number of reforms that were brought in. For instance, the card issuers were forbidden from issuing credit cards to those under 21 years of age. However, cards could be issued in case these students can get someone to co-sign or if they can show proof of income.

Due to this, college affinity cards have been on the decline nationally. The reports in USA Today have also revealed that Chase had recently communicated to Cornell about their intentions to stop the college-affiliated cards altogether.

The CARD Act seems to have gone a long way in protecting gullible students from getting into an enormous debt cycle, but it has also prevented students from trying to establish credit scores and learning the ropes earlier on in life. Instead of totally banning students from gaining access to credit cards, students need to be guided on the right ways to use them prudently. Educating students on such critical issues will help in making them responsible cardholders. Hence, personal finance tips should be handed out to these students while they are still in college.