January 12, 2009     Reported By: Anne Ravana

A local chapter of a Washington D.C. financial literacy organization is urging Maine colleges to ban credit card companies from soliciting students on campus. The group says most students have very little education on credit cards and are already graduating with large student loan debt.

Caroline Wales is in her sixth year at work on a bachelor's degree in psychology at the University of Maine at Orono. Last fall, her student loans were delayed, and in order to pay some bills she applied online for a credit card. "It was supposed to help supplement my income for a little while. And within the last couple months, I'd say I put about $3,000 on it, paying off bills and just doing things that I needed, because I make very little where I do work because I'm part time."

Wales is 23 and originally from Annapolis, Maryland. She's taken out $50,000 in student loans and works part time as a nanny for a family in Orono.  "When I got my first credit card I didn't really go through a long process of trying to get something, you know, that would be the lowest rate because it just didn't really occur to me, I'd never really dealt with it before.  But I realized, wait a minute, I'm putting an awful lot on here.  Because when I first got it, I was like, you know I won't rack up much, it'll be a very small amount, so it's not something I'll worry about, and I'll pay it right off because my money's coming through real soon. It didn't really work out that way.">

"A $3,000 credit card doesn't sound like much to a person that's earning money, but to a college student it can take you 8, 10 years to pay off if you're making a nominal amount of money and therefore can only pay a minimum payment," says Bill Olsen, president of the Maine chapter of the Jump$tart Coalition for Personal Financial Literacy. The Washington D.C.-based nonprofit is urging college presidents to ban credit card companies from setting up booths on campus to make it easier to find and attract students who might be looking for more spending money.

"Direct solicitation by credit card companies to students borders on being predatory."  Olsen says college students are being inundated with credit card offers in person and by mail, receiving as many as 15 in their first week of school. He says statistics have found that a vast majority of these students have very little education about credit cards, the cost of borrowing, and the effects missed payments will have on their credit score. Nationally, the coalition says college students average $3,000 in credit card debt and upwards of $20,000 in student loans.

Given that college students generally have low income during this period of their life, many pay only the minimum payment which can take several years to repay.  The coalition is sending letters to Maine college presidents requesting that they voluntarily support a ban on credit card solicitation on campus. The effort is timed to coincide with the start of second semester at colleges and universities across Maine.

Olsen says there are a number of schools in Maine that have already banned or restricted credit card solicitation on their campuses. Colby College in Waterville is one of them. David Eaton is a spokesman for Colby. "Essentially we don't permit any solicitations that would potentially involve our students in signing themselves up for a contractual agreement. That would include credit card solicitations, cellphone solicitations, things along those lines we simply don't permit on campus."

But it can be difficult to impose similar bans on public campuses such as the University of Maine. Robert Dana is vice president of student affairs at the University of Maine at Orono, where banks are allowed to advertise credit cards in person on campus just as other vendors come to sell posters, tee-shirts and other merchandise.  "We're very thoughtful, if you will, about bringing credit card vendors on campus. They're allowed, as every vendor is, so we make no distinction, but if you want to come on campus and sell your wares you have to pay for that privilege and you have to follow university rules in terms of time, place and manner."

Dana says the university doesn't receive many requests from banks to come to campus, nor does the school sell students' contact information to banks. In response to credit card solicitations, the school offers financial literacy workshops to teach students about the complexities of building credit and setting limits on their spending.

As for student Caroline Wales, she says she hopes to pay off her credit card as soon as she gets her next student loan check.  "As my loans come in and I get the money that I need to pay this credit card off, I'm actually--I'm just going to cut it right up because I don't need it anymore."

Calls to credit card companies and Bank of America were not returned by air time. For more information on the Jumpstart Coalition for Personal Financial Literacy, visit www.jumpstart.org.