New Jersey 101.5 FM Radio

As College Students Return To Campus, Easy Credit Not Waiting

New Jersey 101.5 FM Radio — Monday, August 23, 2010

By Martin Di Caro

There is one less thing for parents to worry about as they send their kids back to college this month: credit card companies may no longer issue the plastic that leads to thousands in debt before they graduate.

Under a new law, credit card companies may not issue a card to anyone under 21 unless that individual can demonstrate that he or she can make the payments, or if the parents co-sign. The reform was a long time coming, say consumer protection advocates.

"The average college student graduates today with $8,000 in credit card debt and that is absolutely appalling," said Phyllis Salowe-Kaye, the executive director of New Jersey Citizen Action. "Credit has been made incredibly available by certain lenders to kids who have almost no chance to be able to repay it in any foreseeable future."

Leaving college with lots of debt or a bad credit history presents obvious problems. College graduates making entry level salaries will see a large chuck of their pay going toward paying off the high interest rate debt that snags so many American consumers. Also, a poor credit history can make securing loans for cars or other necessities difficult. A growing number of employers are checking credit histories in the hiring process, too.

Salowe-Kaye said the new regulations will present students an opportunity to build up a positive credit history.

"Something else that parents should consider doing in order to allow a college student to establish a credit record is to sign up for a credit card that the parent is able to monitor," she said.

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