Anyone who attended college in the 80s and 90s has almost certainly been the target of credit card marketing on campus. Banks would frequently erect booths near dormitories and at major sporting events. Students would be invited to fill out credit card applications in exchange for t-shirts, duffel bags, or even a chance to win a prize. Credit was granted to young adults who had little ability to repay these loans, resulting in students who owed massive amounts to these banks upon graduation. The CARD Act of 2009 regulated the bank’s efforts to recruit student applicants, while restricting their ability to extend credit to those with no means of repayment.
Limits On College Recruitment
Since the implementation of the CARD Act, banks are no longer allowed to recruit student applicants on campus. Solicitations can occur, but bank representatives must remain at least 1,000 feet off of campus if they are offering food or other enticements. Furthermore, they are restricted from offering gifts in return for people filling out new applications for credit. Unfortunately, the law only specified “tangible gifts,” which many banks have interpreted in such a way as to allow the distribution of online coupons or bonus reward points.
Restrictions on Granting Credit To Young Adults
Another practice that the authors of CARD Act sought to curtail was the granting of credit to college students and young adults who lacked a means to repay their debts. Too often, college students who incurred substantial credit card debt would rely on their parents for repayment. The CARD Act prohibits banks from extending credit to adults between the ages of 18 and 21, unless they can obtain a co-signer that is above 21. Otherwise, applicants must prove that they have a means to repay their debts.
Unfortunately, the law does not specify exactly what type of proof must be provided by a student in order to show their ability to repay a loan. Therefore, the banks are now simply relying on the stated income of student credit card applicants. Finally, the requirement adults under 21 obtain a co-signer has led to students asking their older classmates to co-sign their credit card applications. Needless to say, this is an extremely ill-advised practice as it forces both parties to be responsible for all debts incurred by individuals who may be little more than casual acquaintances.
The CARD Act of 2009 was a good first step in curtailing the bank’s predatory marketing towards students. Nevertheless, this law is filled with significant loopholes. To ensure that college students use credit cards responsibly, parents must still educate their children while monitoring their credit card usage as they become young adults.
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