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Paying with plastic: Students face credit dilemmas
by Monica Patankar
Assistant News Editor
by Cristina Psomadakis
Assistant News Editor
Although students are bombarded with credit card applications through campus mail and e-mail as soon as they enter college, students at Loyola are finding that managing their personal finances is not as simple as paying off a monthly bill.
When freshman Donald Gosnell applied for an American Express card, he did not expect to get denied because of the college he attended. Although the company cited his age among the reasons for rejection, Gosnell said that the fact that he attended Loyola was the main reasons.
"Two weeks [after I had filled out the online application], I received a letter that had [the] reasons as to why I had been rejected," Gosnell said. "[One] reason was the number of students that do not return to Loyola after freshman year. Another reason was the amount of bad credit students at Loyola have."
Although Gosnell later applied for a Capitol One card and was accepted, he said he was surprised that he was scrutinized because of other students' mistakes.
"This is a big school," Gosnell said. "I don't see why I should be punished for someone else's bad credit."
Cynthia Redman, university treasurer, said she did not know why attending Loyola would have a negative affect on students applying for credit cards. She said she believes that things like late car or mortgage payments tend to be the cause of credit card rejection.
"Anyone can build a bad credit history even without having any credit cards," Redman said. "Sometimes it is most difficult to get a credit card when you have no credit history at all."
A student's credit, however, is not set in stone. There are many things students can do to improve their credit history, according to Redman.
"Make all payments on a timely basis - car payments, rent, mortgage, student loans, phone bills, electric bills," Redman said. "Another suggestion is to apply for a credit card with a small [credit] line and use the card responsibly so you can build a good credit history."
Additionally, Redman said, students are not as irresponsible as they seems when using credit.
"I don't necessarily agree that college students are so susceptible to bad credit," Redman said. "I believe there is a very small percentage of the general population that has difficulty with financial matters, and some of these people are students."
National statistics, however, seem to show otherwise. According to a study conducted by Nellie Mae, a leading provider of student education loans, 80 percent of students with credit cards are in debt. The study also showed the average student debt to be $3,000.
Although students are at a time in life when they most need credit counseling, many classes do not specifically teach students how to manage their finances Larry Metzger, chair of Loyola's accounting department, said. However, Metzger said he emphasizes the responsible use of credit cards in his lectures.
In order to stay out of debt, Metzger said students should be aware of the severe consequences of not paying monthly credit card bills.
"If students get behind on their payments, they incur tremendous debt and credit card companies make money on interest," Metzger said. "The biggest issue is interest. Even with seemingly low interest rates, the rates are still [relatively] high."
Metzger said he advises his students to use their credit cards only on an emergency basis to avoid debt.
"Debt carries with you," Metzger said. "Along with paying back student loans, students may have significant credit card debt when they leave college. Credit cards are useful only if they are used right."
Loyola students said that although they find that credit cards offer convenience, situations arise where it is often difficult to pay off the bills.
Junior Mike Kauffman said he is careful when he makes purchases on his credit card because he now realizes that interest rates are high.
"In one case I was behind in my payment," Kauffman said. "I could pay the minimum but I couldn't pay it all. Credit cards are beneficial only if you pay them off."
According to Metzger, because college students are expected to have a high income after graduating from college, they are targeted by companies to sign up for credit cards.
"Credit card companies throw [credit cards] at you and you can get them very easily," Metzger said.
Junior Beth Bottje said the constant pressure of credit card solicitors can become overwhelming to students.
"We do not need extra people coming to offer credit cards on campus," Bottje said. "People approach teenagers with credit card applications wherever they go."
In order to protect students from credit card companies, Loyola has certain restrictions on companies soliciting credit cards on campus.
Jane Neufeld, senior assistant dean of student development and diversity, said different vendors are allowed to sell merchandise to students at the Lake Shore campus in areas such as Centennial Forum Student Union, only with approval from the university. However, companies are not permitted to solicit credit card applications on campus, according to Neufeld.
"We are worried about students being preyed upon," Neufeld said. "If students want to get credit cards, they can get them outside the university."
The Water Tower campus has a similar policy regarding credit card companies. Jennifer Kaczmarek-Ison, assistant dean for student development and diversity, said financial institutions are allowed to offer services such as seminars and special promotions in the 25 E. Pearson Building lobby. However, companies cannot offer credit card applications to students while on campus, according to Kaczmarek-Ison.
Joe Christman, operations manager at Centennial Forum Student Union, said that if credit card companies are found handing out applications on campus, campus security can be notified.
"Credit card companies are not supposed to be on campus at all," Christman said. "If they are found, we can call public safety. We don't want to advertise anything that puts financial burdens on students."
Although Loyola tries to prevent credit card companies from coming to campus, students are ultimately liable for using credit irresponsibly, Redman said.
"Credit card companies tend to be very aggressive in marketing to various constituencies and sometimes issue credit cards to individuals who do not handle it responsibly," Redman said. "Ultimately, it is the responsibility of the individual to use credit appropriately."
For credit counseling, students can visit debtadvice.org, an online service that offers free advice on subjects such as getting out of debt. Also, online support groups on this site give students a chance to discuss the emotional burdens of credit card debt.
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revised February 27, 2002 by
phoenix@luc.edu
URL: http://www.luc.edu/phoenix
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