A new credit card legislation that went in effect Monday could help prevent college students from falling prey to credit card companies, but the effects of these laws might not be seen for a while.
Along with the set of benefits for consumers planned in May 2009 came a number of changes credit companies made in order to continue earning profits after restrictions were applied, student legal services attorney John Connor said.
"These credit card companies had nine months to prepare," he said. "And so that gave them an opportunity to decide where to increase their fees. I'm sure it will take a number of years to determine whether or not, in fact, it had any positive effect."
Some of the changes in the credit card law are specifically aimed at colleges and students, banning credit companies from offering gifts in exchange for having students sign a contract with them. It also encourages universities to require credit companies to notify them of any location on campus they are marketing credit card plans.
People under the age of 21 will not be able to apply for a credit card unless they are under the supervision of a person over age 21. Anyone who applies must also have a way to prove they have the means to repay the debt.
A last point requires parents to give the approval to increase a credit line for people under 21 years old. These restrictions were made with the intention of protecting college students from holding large debts. In 2008, at least 84 percent of undergraduates had at least one credit card, according to the Associated Press.
"As a parent, the idea of my 18-year-old son or daughter getting a card that I don't know about and then racking it up and then the thought that they are going to come to me near graduation saying ‘Dad, I got this $10,000 debt that I need help on,'" Connor said. "As a dad it's pretty difficult to say no to your son or daughter, so as a parent I kind of like the idea of having some knowledge of some debt that might ultimately come back to me, that I might have to pay."
However, not everyone finds the new restrictions as beneficial for students. The idea of having more responsibility on campus is important in the development of college students, junior accounting major Emily Beard said.
"I think it's good when [credit card companies] come to campus," she said. "As college students we should have the responsibility to have a credit card and be able to pay it off."
Others think having a credit card can be good if students are responsible with how they are using it.
"My advice for students is to only use [their credit card] for a certain type of transaction, like buying groceries or gas specifically, and to keep track of what they spend so they don't go over the limit," junior accounting major Karli Hougland said.
The consequences of having problems with credit cards could affect students in the long run, Connor said.
"My opinion is affected by the downside of what I've seen in this office," he said. "I see a lot of students who are contemplating bankruptcy, and if you file bankruptcy that will affect your ability to get loans. This is something that affects students right at the point in their graduation. It's kind of devastating to start your career off with bad credit or to start a new job having your wages garnished."
Conor said developing history of demonstrating credit responsibility, like not taking out more than what can be afforded to repay and being timely on payments, can help students not fall on debt that could affect them in years to come.
"You can't have a good credit history if you haven't had credit before, so you have to demonstrate that you can handle it in a competent manner," he said.
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