SOMEWHERE out there, in a smoky, dimly lit room, there is a wild-eyed credit card company executive, fine-tuning his latest nefarious plot to drive college students to financial ruin. He will trick students into acquiring credit cards and, even more deviously, to use them. Something has to be done to stop him. Congress must act.
Or at least that's what Rep. Louise Slaughter (D-NY) would have us believe. She introduced a bill earlier this year that would restrict the credit limits and solicitation practices of credit card issuers. But the General Accounting Office study she commissioned shows that there is little need for the federal government to get into the business of protecting college students from themselves. Congress should let this bill die a swift, quiet death.
The bill, H.R. 184, is intended "to prevent credit card issuers from taking unfair advantage of full-time, traditional-aged, college students" by mandating the number of cards and the credit limits full-time college students can have. But that's not what it would really do. Federal intervention in college students' use of credit cards doesn't protect students from the credit card companies. It protects students from themselves.
There's nothing unfair, or even unpredictable, about signing up for and using a credit card. There's no hidden mystery to it. By keeping track of expenditures, you can know exactly what you'll owe at the end of the month. If students are getting in over their heads, it's because they don't exercise restraint, not because credit card companies are doing something unfair. What Slaughter's bill really says is that Uncle Sam needs to protect students from themselves.
This could be true. Are students unfit to make their own decisions? Is the average student too irresponsible to have a credit card and make his or her own day-to-day financial decisions? According to the GAO report, two-thirds of college students have at least one credit card in their name, and most have combined credit limits (from all their credit cards) of less than $3,000. Over 60 percent of students pay their bills in full every month; the bulk of the remaining students carry a balance of less than $1,000.
But college students are poor, aren't they? Even these modest limits might be too much for them, right? Again, the report says otherwise: The average student earns $4,550 a year. This doesn't even all go to tuition or rent. The average amount available for discretionary spending - that is, spending that is not already committed to tuition, books, rent, etc. - is $195 per month. The report found that the average student charges only $127 per month ("Consumer Finance: College Students and Credit Cards," GAO-01-773, June 20).
All of these numbers mean that college students, on the whole, are fairly responsible credit card users. Of course there are some students who don't manage their money responsibly. But there are many students who don't manage their time responsibly, either. Do we need federal legislation to limit how many extracurricular activities students can have, how many hours a week they can work in a part-time job, or how many hours they must spend in the library? Of course not.
Money management, like time management, is an important skill to learn - both skills require responsibility; both have similar consequences for failure. But that burden is a necessary one. Students have to be allowed to become adults. College is, among other things, about learning to take responsibility for your own actions, learning to live without your parents - or the federal government - holding your hand. Congress shouldn't intervene to keep that learning process from occurring.
(Bryan Maxwell's column appears Wednesdays in The Cavalier Daily. He can be reached at bmaxwell@cavalierdaily.com.)
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