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Texas college students and overwhelming debt: Credit cards blamed

An assistant professor of law says that when a bank wants to justify offering a credit card to a college student, a student loan can be considered income. A survey of 500 students at the University of Houston and Baylor University concluded that banks are getting increasingly creative in order to avoid new restrictions by the federal government on the advertising of credit cards to college students.

The study found that the banking industry has created marketing methods in response to the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009, and those methods may well simply add to potentially overwhelming debt of our university students, which is what the government restrictions were designed to prevent in the first place.

Lender practices include new initiatives to send credit card offers to students in the mail. Promotional offers and physical gifts to potential collegiate credit card customers continue to proliferate. And one of the arguably outrageous methods used by lenders involves crediting college students with income for loans they have received for their education, even though those loans are typically meant for tuition and fees as opposed to overwhelming credit card debt.

At first glance, it appears that not much has changed in terms of marketing credit cards to students on college campuses despite the new federal prohibitions. Many college students, hopefully primarily focused on their studies, are typically unprepared to manage this level of debt, particularly when they have no true income to offset the obligations.

College students report they are still receiving credit card offers via the mail and have seen firsthand credit card companies at the their schools looking to sign up fellow students.

For those students or recent graduates who have amassed overwhelming debt that they are unable to pay, there is help available. Houston area residents who have seen their financial obligations far outstrip their ability to pay; bankruptcy protection may offer the means to conquer the problem. Through the supervision of the court, an individual can confront their financial troubles in an orderly manner while planning a fresh start aimed at achieving financial security once and for all.

Source: Fox Business, "Study: Despite New Law, Credit Cards Finding their Way to Students," Martin Merzer, April 27, 2012

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