NINA PRIKAZSKY
Effort required

During the first week of college, students are bombarded with all kinds of offers, from magazine and newspaper subscriptions to opportunities to join student organizations. But one type of solicitation, the marketing of credit cards, has become a plague designed to lure students into an ever-widening web of debt sometimes surpassing student-loan debt, according to industry watchers.

Attempting to prevent young consumers from ruining their credit histories straight out of the gate, the Federal Trade Commission – in conjunction with Boston-area universities and Nellie Mae – has launched an educational program targeting the most vulnerable: incoming freshmen.

“These [freshmen] are subjected to fairly aggressive marketing by credit card companies,” said Barbara Anthony, regional director of the Northeast region of the FTC. “Many times students get in over their heads and the debt snowballs.”

According to a recent study by Nellie Mae, credit card debt is soaring among college students. Since 1998, the percentage of students with four or more credit cards nearly doubled to 47 percent by 2001, while the percentage of students holding credit cards grew from 67 to 83 percent.

One in five students carries between $3,000 and $7,000 in credit card debt alone, without including other student loans, said Anthony. One in 10 carries over that amount. “That’s a lot to be carrying when you don’t have a job,” she said.

While many credit card companies lure students to apply by offering free T-shirts and compact disc holders, they don’t take the time to explain the full terms of the agreement to which students are binding themselves. Often there is a low introductory rate but when that time is over, rates can soar to 28 percent, as was the case with Lilly La Branche, a Northeastern sophomore who spoke about her past problems with credit card debt.

She obtained her first credit card when she was 18 and used credit from student loans to pay off that credit and other bills. But after her freshman year, she got a job and quickly paid down her debt, at which time she got another credit card. Although she now holds only one credit card with a small limit for emergencies, her credit rating is damaged for a long time to come. “I couldn’t get any more credit cards even if I wanted to,” she said.

La Branche also fears that bad credit will hinder her search for a job in law enforcement.

“The incoming students don’t understand that credit card debt can dog them the rest of their lives,” said Anthony, adding that students aren’t taught how to handle their finances in school. “It’s not rocket science, but it’s not taught to us in grade school.”

Getting Better

The program, Anthony noted, will consist of focusing attention on the problem through media events, distribution of literature on the ABCs of credit through bookstores and other points and classes taught in financial awareness.

Additionally, a group of student actors who regularly perform educational acts presented a skit exhibiting the schadenfreude of the credit card companies.

Students don’t understand just how many aspects of their lives can be affected by credit problems, said retired Rear Admiral W. Norman Johnson, who is the vice president and dean of students at Boston University. “Large credit card debt upon graduation can limit opportunities for relocation, delay car or home ownership options and constrain choices for lifestyle arrangements.” The university has prohibited credit card solicitors from renting space in the student union and doesn’t allow applications to be included among shopping bag brochures in the bookstore.

“However, our students are not immune to the temptations and aggressive tactics of credit card solicitors. It is amazing what the promise of a T-shirt can do to an otherwise intelligent college student,” he said. Johnson said the problem is rampant among the young in the military as well.

But partnerships with credit card companies and banks can prove advantageous to both students and business. Northeastern has partnered with Wilmington, Del.-based MBNA Corp. to provide education about the use of credit cards, according to Ronald L. Martel, dean of student life at Northeastern. “I think the normal use of credit is part of the healthy maturation [process],” he said. Parents can also help by not providing credit cards to students. There are plenty of other options, such as debit cards, “without extending that bottomless pit of credit,” he said.

The problem isn’t limited to the Northeast. “Four years ago, the University of Indiana reported that they lost more students to credit card debt than to academic failure,” said Nina Prikazsky, vice president of operations for Nellie Mae.

Local banks can really make a difference if they’re willing to put forth the effort, she said. Those who offer credit cards to students should be up front with rates and fees and explain the ramifications in terms the student can understand, such as how long it may take to pay off a debt if only the minimum payment is made.

“Banks have been getting a lot better in helping students to become more savvy. But what they don’t necessarily do is promote paying off early,” Prikazsky said.

During the press conference, obtaining credit cards through a credit union was advocated a few times because of their generally lower rates.

Colleges involved in the program include Boston University, Northeastern University, Suffolk University and the University of Massachusetts at Boston.