Legislation would protect students from credit-card debt
Saturday, July 5th 2003, 12:00 am
News On 6
Rep. Joe Dorman, D-Rush Springs, is also studying recommendations for educating young people on how to use credit responsibly.
Statistics show that 76 percent of divorces, 68 percent of child abuse cases and 25 percent of suicides are related to debt or other financial issues.
Student suicides, including a couple in Oklahoma, have been attributed to worry about credit card debt. Some universities have attempted to restrict on-campus access by credit card companies.
This year, Dorman filed a bill to prohibit extending consumer credit to an unemancipated person under 22 without proof of annual income of $12,000 or more, plus parental permission. The bill died in the House Rules Committee.
Dorman said regulating credit cards is largely a federal issue and that he will encourage Congress to pass reforms.
"One thing we can do is try to educate students," he said. "I've visited with several of the university presidents and we're going to try and get a system set up for an educational program to be taught during freshman orientation."
The lawmaker said he does not want to restrict access to credit.
"But we have to make sure that people understand that this is something dangerous if it's misused," Dorman added.
Dorman said the legislative study will analyze rates on loans available to consumers to determine whether any of them constitute predatory lending.
"Young adults with no credit history appear to be the targets for charge card salesmen," Dorman said.
According to a 2002 report on college student credit card use by Nellie Mae, a student loan agency, 83 percent of undergraduates had at least one credit card in 2001, a 24 percent increase since 1998. Their average balance was $2,327, up 15 percent from 2000.
The study found that students doubled their average credit card debt and tripled the number of cards they carried from the time they arrived on campus until graduation.
For those new to the credit card world, Dorman said, easy credit can spiral into an ever-increasing balance fueled by late fees, skipped monthly payment charges and high interest rates.
Dorman said he sympathizes with college students who find themselves in a bit over their heads, creditwise.
"I got myself in the same problem in college," he said. "I had four credit cards. Just like my other friends, I'd use them and think, well, I'm going to get that $100,000-a-year job after college, and that's just not the case."
"Too many Oklahomans find themselves so deep in debt they have no way of climbing out, and it could stem from a lack of understanding how credit works," he said.