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A hard lesson in debt
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October 17, 1996: 8:51 p.m. ET
Credit-card companies attacked as college students pile up bills
From Correspondent Carmine Gallo
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NEW YORK (CNNfn) - Credit-card companies have never been accused of being discriminate in their customer solicitations, but their practice of targeting college students with no money and no credit history is making school administrators angry.
College is a place of higher learning, and many students are learning the hard lessons of piling up debt. A recent survey shows that 60 percent of students hold at least one credit card and 20 percent carry four or more.
As a result, many students are sinking into the black hole of debt, and the fall usually starts with the first card.
"(The first card) was the beginning of the end," said Henry Nixon, a student at John Jay College in New York. "That credit card led to another credit card, another credit and another credit card, till finally I had 19 credit cards."
Loaded with plastic, Nixon racked up more than $10,000 in debt. He finally had to leave school for three semesters to pay the bills.
Dr. Roger Witherspoon, vice president of student development at John Jay, says Nixon is not alone.
"Of the 10,800 students, every semester 10, 15, 20, 30 or even more drop out of school as a result of credit card abuse," he said. "And we have many others who have to take other jobs in order to make ends meet."
The problem led school officials to ban credit-card advertisements on campus.
But Bill Mattison, an analyst with Gerard Klauer Mattison, said college students can't escape the aggressive tactics companies employ to lure in new customers. (106K WAV) or (106K AIF)
Credit-card companies have made some efforts to educate young card holders. MasterCard distributes a booklet to college students on fiscal responsibility.
But debt counselors say that's not enough. They say parents must also teach their children how to manage money and debt.
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