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Curb Student Credit Cards, Congress Told

September 06, 2002|From Associated Press

WASHINGTON — More college students are overusing credit cards, academics and policy makers said Thursday as they urged Congress to act on the problem.

"Often it's their unknowing parents who end up dealing with the debt," Ellen Frishberg, director of student financial services at Johns Hopkins University, told the Senate Banking Committee.

Of undergraduates, 83% had at least one credit card last year, up from 67% in 1998, according to a study by Nellie Mae, a provider of student loans. The proportion of students with four or more credit cards jumped from 27% to 47% in that period, the study found.

The Education Department recently found that more than 44% of college students carried a balance on a credit card during the 1999-2000 school year. Among those students, the average credit card debt was $3,066. It was the first year such data were collected.

Robert Manning, an economic sociologist at the Rochester Institute of Technology, testified that credit card companies were increasingly marketing to freshmen rather than just juniors and seniors, as in years past.

"It means that the debt burden is going to show up earlier," Manning said.

"It means that retention in college is going to be affected, and we're going to see an increase in dropout rates."

Sen. Christopher J. Dodd (D-Conn.) said he would order a General Accounting Office investigation into the marketing of credit cards on campuses. He also said he would pursue legislation to boost financial literacy among students.

Sen. Phil Gramm (R-Texas) is among the lawmakers who see no need for restricting college students' access to credit cards.

"They can be drafted. They can start a business. They can get married," Gramm said. "I do think we have to be careful in a free society about how far we're going to go in restricting people's rights."

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