Spring break is just around the corner. For college students, this often means a much-needed respite from the books and some fun in the sun. But it also can translate into credit card debt.

If your student has plans to travel in March, this is the perfect time to sit down with them and talk about how the trip will be financed, says Kevin O’Toole, education director at Consumer Credit Counseling Service. It’s not uncommon, he says, for students to get larger-than-expected credit card statements in April.

“Students need to develop a game plan,” he says. “They need to figure out how they’re going to finance the bankroll—food for a week, travel expenses, etc. Where will the money come from?”

Oftentimes, he says, students have the best intentions—perhaps even planning a spring break budget—but it is easy to rack up unintended debt on vacation. Three years ago, the nonprofit Consumer Credit Counseling Service began offering free credit counseling to students as part of a UI campus initiative called Paper or Plastic? Sensing more aggressive tactics by credit card issuers as well as an increase in the average student debt, several groups on campus met to discuss the issue and generate solutions.

Paper or Plastic? was the result. In addition to free counseling services, it offers educational programming to student groups as well as summer orientation sessions for parents. It is cosponsored by the Women’s Resource and Action Center (WRAC), the Alumni Association, the Office of Student Financial Aid, Support Service Programs, University Counseling Service, the Office of Student Life, the Cashier’s Office, Iowa State University Extension-Johnson County, and Consumer Credit Counseling Service.

“We want to focus on preventive measures, such as raising awareness,” says Monique DiCarlo, director of WRAC. “We don’t want to preach. We just want students to use credit wisely and to help them develop skills that will continue long after graduation.”

From the cradle to the grave

Although credit card issuers have been aggressive for some time, O’Toole says that in recent years he has witnessed higher marketing intensity.

“Solicitation is fierce,” he says. “Credit card issuers have saturated the market, and now lenders are competing with each other. Their offers are driven by perks like free t-shirts and candy. Lenders want to be the first credit card in your wallet, and college students represent a tremendous potential market to them.”

Noting research that indicates consumers are “loyal” to their first credit card, O’Toole says lenders now are targeting high school seniors who are 18.

Samantha Houston, a UI senior from Van Meter, Iowa, got her first credit card in high school.

“I thought that I would need one for college if I wanted to buy things over the phone or on-line,” she says. “I applied for it over the phone—I actually listened to a telemarketer, and he sold me on it.”

Although Houston pays her balance in full each month, many students get into situations where they are not able to do so. In fact, according to an exit survey conducted earlier this year by the Office of Student Financial Aid, 104 out of 363 student respondents carried a total credit card balance of more than $2,000.

Growing credit card debt among college-aged adults has raised enough concern that U.S. Senator Christopher Dodd of Connecticut introduced legislation in September that would require greater responsibility on the part of companies issuing credit cards to students and youth under age 21.

Help is available

“There is a distinct learning curve with credit cards,” O’Toole says. “If students haven’t figured them out—their folks haven’t given them the Ps and Qs—credit cards might seem like free money, and that can get them in trouble.”

Students with specific questions about their finances should schedule an appointment with a counselor, he says, but those who want to develop general budgeting skills also are welcome. Counselors—operating out of an office in the student union 10 months a year—teach students how to shop for the best interest rate, demonstrate interest accrual, explain the pitfalls of minimum payments, and emphasize the importance of paying bills on time.

Credit histories may be reviewed by potential employers, landlords, insurance agents, or even admissions offices at graduate schools, DiCarlo says.

“Late payments may prevent someone from getting a mortgage or a car loan in the future,” she says.

At last summer’s orientation, DiCarlo heard several parents say that they simply wouldn’t let their students have credit cards. That’s unrealistic, she says.

“You can’t control whether your student has a credit card. It’s easy for them to sign up for one without your knowledge. Applications are everywhere,” she says. “But you can help them learn how to use credit wisely and make sure they understand that credit card debt can affect their future.”

DiCarlo emphasizes that many students learn money management skills from their parents. Houston is no exception.

“My mom taught me not to count on someone else to keep track of my money, that I needed to know where it was at—down to the last cent,” she says. “I always balance my checkbook and double check the bank.”

What parents can do

Parents should start by entering into a respectful conversation with their student and find out how he or she is doing financially, DiCarlo suggests.

“One of the best things parents can do is talk about personal experience—tell their student about things they didn’t know that led to bad decisions and how they dealt with them. So talk to them about your mistakes and how you fixed them,” she says. “And stay in the loop.”

It also is important for parents to be familiar with campus resources and to be knowledgeable about everything from scholarships to budgeting.

“Our goals are to educate students and get information to parents,” O’Toole says. “Parents can contact Consumer Credit Counseling Services directly and we’ll send out literature. We feel we have an obligation to give parents and students the tools they need.”

Credit cards, DiCarlo and O’Toole insist, do have an upside. They practically are essential in securing car rentals or hotel reservations. And they allow students an opportunity to learn financial management skills early in life.

“We’re not opposed to credit cards,” O’Toole says. “We just want students to use them wisely.”

For information, call Consumer Credit Counseling Service at (319) 335-3239 or (800) 826-3574.

—By Sara Epstein Moninger

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