Editorial: Government taking charge with credit card act

Forget the idea that college campuses exist in a vacuum unsusceptible to the economic shortfalls… Forget the idea that college campuses exist in a vacuum unsusceptible to the economic shortfalls of the outside world. Jobs for college students seem scarce, and the economy sure isn’t making it easier to get student loans.

But starting in February, there’ll be a new measure resulting from our poor economy that’s sure to affect a significant portion of students: The Credit Card Accountability Responsibility and Disclosure Act of 2009.

The banks received a hefty portion of the blame over the United States’ monetary woes. As a result, college students will now be directly affected by the all-too-mystifying term, “regulation.”

According to a recent Sallie Mae survey, 84 percent of all college students have at least one credit card, while the average student has 4.6 credit cards. It’s fair to say that credit cards are ubiquitous among the college student population.

Under the federal act, however, people younger than 21 will face new obstacles in getting a credit card.

Students hoping to get a credit card today face a fairly straightforward process: There are a few forms to fill out and lines to sign. Sometimes, there’s even a free T-shirt for new cardholders, although the act will nix such promotions come February.

Once the act goes into effect, those younger than 21 will either need someone older than 21 co-sign cards or provide proof they can independently pay off existing credit card balances.

College students are notorious for being less-than-responsible with their money.

According to the same Sallie Mae survey, college seniors graduate with an average credit card debt of more than $4,100, an increase from about $2,900 in 2004.

Although this act directly affects students, it’s much more likely that the careless spending habits of young people were at most a tertiary impetus. These measures are the first transparent effects of increased government regulation of banks.

Federal law will, of course, enforce the sub-21 age limitation. The banks will not have the discretion to say who is or isn’t monetarily “responsible” enough to receive a card. This proves the government doesn’t want to take chances or let the banks repeat mistakes that contributed to the recession.

By 21, most people — college students or not — have a better understanding of how finances work than when they were 18 or 19. This understanding, along with the safeguard measure requiring an older co-signer, should absolutely limit the number of new cardholders that become swallowed in debt.

Perhaps the average college student has only a shallow understanding of the recession and the economic situation. To some of the more fortunate, this new act might provide the first encounter with the recession’s effects.

Yet it also begs the question: How will college students feel about facing the regulation firsthand?