I read an article today that talked about college students paying their tuition with credit cards. With the economy seemingly getting worse and parental contributions and student loans drying up, where’s a student to turn? Their trusty ol’ credit cards, of course! These kids who may not have the financial education to know better don’t see much of an option, so they put that tuition on the card and think everything will be alright.

Let’s consider the statistics. In a recent survey, two-thirds of the college students who responded said they had at least one credit card. 70% of those same students pay their own monthly bills and 24% have used their cards to pay tuition. One student from L.A. told the research group conducting the survey that he put $4000 on his credit card from tuition and now, he’s in his first year of law school, he’s struggling just to make the minimum payments. He’s also had to use the card for other expenses like books and meals, so the card’s almost maxed out – and so is his cash flow.

A representative of the credit card industry said that stories like this one are aberrations and that two out of three students paid their balance in full every month.

BULLSH*T!

Yeah, that’s right. I’m calling bullsh*t on the credit card industry. If two out of three students were paying their credit cards off every month, then we wouldn’t have statistics showing the average college student with more than $3000 in credit card debt after graduation – more if they also have student loans. The numbers suggest otherwise, Mr. Credit Card Industry Representative. And how come said representative can spew that crap during a congressional testimony and get away with it?

If the above statement were true, if only a small minority of students were struggling with their payments while everyone else was paying off their debt, why then would regulators be so concerned? Regulators are now questioning whether the schools are making it too easy for the credit card companies to pander their plastic. Well, this just gets better and better in my opinion. Now it’s the schools’ fault? Let’s not place blame with the credit card companies who specifically write their terms and conditions to be as confusing as possible even to the savviest financial expert. No, surly they have absolutely no fault in allowing a college student to have a credit limit that exceeds the amount of money they will make their entire college career!

And regulators wonder why we have bubbles in this country. For the love of Pete!

Obviously, I’m annoyed. So taking a step back from that annoyance, I’m trying to understand the other side. Maybe the schools are a little to blame. After all, the schools do get a little income from these marketing campaigns – collectively speaking they collect money to the tune of $1 billion a year. Clearly there’s an unsavory relationship between the schools and the credit card companies.

But, back to calling the industry on their B.S. Kenneth Clayton, senior vice president of the card policy council of the American Banker’s Association, was the one giving testimony before Congress. He further stated that credit cards helped cash-strapped students “stay in school, build their credit histories, and provide a financial safety net in emergencies.” He continues by saying that the vast majority of students want to manage their finances responsibly. Certainly there are those who take on more than they can handle, but overall, most of them want to be responsible with their decisions.

The danger with this thinking is making the assumption that all college students have the financial know-how to truly make an educated decision. I’ve seen far too many adults who don’t know the severe consequences a credit card can have, but you’re talking about kids in school who are lured into filling out the application by gifts and free food. Forgive me, but there’s no guarantee that the students filling out the form have any concept of how it works. They’re doing it for the free stuff. I know…I’ve been on campus with a credit card staff. It was terrible. They didn’t answer questions, they promised all kinds of great rewards, and those kids went along with it for the free stuff they got NOW.

So, here’s to you, Mr. Clayton. I’m calling your bullsh*t, because you and I both know that college kids are targeted more than any other age group. They are more susceptible and the credit card industry knows they’re going to get a few million fees out of the deal while these kids cut their teeth on what the real world will be like. And while I don’t think every college kid is without some financial education, I refer you back to what the student from L.A. says:

“I feel like credit card companies target us because we really have no financial awareness. We’re barely out of our homes, barely having experiences as adults, and they throw these things at us, and they don’t make you aware of what you’re signing into.”

I think that sums it up nicely, don’t you?

Related posts:

1. New Rules for February: College Students Won’t Be Receiving Any Valentines from Credit Card Companies in 2010
2. Is Outsourcing of the Financial Industry Feasible?
3. 7 Ways Students Ruin Their Credit
4. When the Collectors Come Calling
5. The Best and Worst of the Credit Card Industry