Thursday, October 18, 2007

Earning the BS at Subprime U

by Tanta on 10/18/2007 09:15:00 AM

Michelle Singletary goes after college-sponsored programs to load students up with credit cards:

In a 2004 study of credit card usage by undergraduates, 56 percent of freshmen reported that they had obtained their first card at the age of 18. The student loan lender Nellie Mae, which conducted the study, said that as students progress through school, their credit card usage swells.

By the time they reach their senior year, 56 percent of students carry four or more cards, with an average balance of $2,864. Of course, some have much more than that. . . .

Not surprisingly, in the Nellie Mae report, only 21 percent of undergraduates with credit cards reported that they paid off all cards each month, and 11 percent said they made less than the minimum required payment each month.
Giving a college student one low-balance card as a form of "starter credit" is, possibly, defensible. Giving a college student four cards? That's the kind of extra credit that prepares them to be subprime borrowers for the rest of their lives.