From Capitol To Campus

A report to congress from the General Accounting Office finds that misuse of credit cards by college students, when "combined with student-loan debt, could lead to substantial debt burdens."

The GAO, at the request of Representatives Louise Slaughter (D-NY), John Duncan (R-TN), and Paul Kanjorski (D-PA), surveyed 100 officials at 12 colleges on student vulnerability to credit-card debt.

Many lawmakers say that credit-card companies prey on the financial inexperience of young people. Although the report makes no recommendations, it did note that officials and students at several of the institutions surveyed said that on-campus credit-card vendors did not tell applicants about the consequences of misusing credit.

Rep. Slaughter notes, "Banks and credit-card companies have put profits first without concern for the customers' long-term financial interests."

About half of college students graduate with an average of $19,400 in student loans, according to the report. And, the report notes, about 40 percent of students do not pay off their credit cards each month. These students carry an average credit-card balance of $577.

A bill currently in Congress would limit credit to 20 percent of a student's annual income without a cosigner and would require parents who cosign for the credit card to agree in writing in order for credit limits to be increased.

Representatives of the credit-card industry argued that restrictions weren't necessary.

View the full Report to Congressional Requesters: College Students and Credit Cards at: www.gao.gov/new.items/do1773.pdf.