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Credit cards can cause overwhelming debt for Texas students

Many parents are preparing to say goodbye to their college bound children this time of year. They are reviewing dorm room checklists to ensure their student has all of the essentials to face the world as an independent adult.

One other decision parents may need to consider is whether or not it is a good idea to encourage their student to obtain a credit card before going away to college, which could result in overwhelming debt, or continue to provide funds through their own hard-earned money.

Since recent federal legislation aimed at curbing credit card debt was passed, it has been more difficult for anybody under the age of 21 to receive a card. This legislation has affected consumers in Texas and in the rest of the United States.

However, despite the law, people under the age of 21 can still obtain a card if they have a qualified co-signer. Younger people can also obtain a credit card by proving sufficient income to keep up with payments. Credit card companies may no longer lure college students on campus with free t-shirts, but they still reach the college student market through aggressive marketing techniques such as mail offers.

If a college student cannot prove sufficient income to repay the debt, parents are usually the ones who the student will have to turn to in order to obtain a qualified co-signer. This puts parents in a position to decide whether or not to take responsibility for their students' credit card debt. Co-signers can be held financially responsible for a student's actions and both of their credit reports could suffer if the bills remain unpaid.

The standards used by credit card companies to determine someone's ability to pay may vary with each company and could potentially put students at risk for overwhelming debt. Some may merely require the student to make enough income to pay minimum payments on their credit card debt which could be a way to circumvent parents in decisions regarding credit cards in Texas and elsewhere.

Source: CharlotteObserver.com, "Credit cards abound for collegians," Dave Carpenter, July 12, 2012

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