Credit cards to be curbed at colleges

As students head to college campuses this fall, they're about to witness the final days of the credit card freebie.

Next year, card issuers won't be allowed to offer free T-shirts, tickets or anything else of value when they market credit cards on campus.

Is that going to stop college students from taking out credit cards? No.

But the end of the freebie is a bag of small fries, though, compared with other changes that hit in February, which include:

Credit card issuers won't be able to hand out credit cards to anyone younger than 21 years old unless that person has resources that could support the debt or the person has a co-signer.

Credit card issuers won't be able to raise the credit limit on one of these accounts if the cardholder is younger than 21 -- unless a cosigner approves an increased credit limit.

Parents, of course, will have to decide if they want to cosign for credit cards for college students who are younger than 21.

Personally, I'd never cosign for a credit card for my son. If the student pays late, experts warn, the late payment would show up on the student's credit report and the credit report for the cosigner on the card. The bad mark hurts both credit scores.

"You shouldn't assume that an 18-year-old or a 20-year-old kid is the best manager of credit," said John Ulzheimer, president of Credit.com.

Jen Lyons, 20, a criminology student at Eastern Michigan University, said the heavier regulations might not be a bad idea. She admits she "went crazy" with her Target Visa for a while. She once had $500 in debt on that Visa, including clothes and other non-necessities, and another $500 in credit card debt on a gas card.

She's since paid it all off and now tries to limit her spending.

This fall, we're already seeing some signs of more restrained credit card marketing.

Some parents of college freshmen told me that their mailboxes weren't overloaded this summer with credit card offers for their college-bound offspring.

After public criticism, Michigan State University this year said it would no longer give Bank of America information about its students.

Michigan State had a seven-year, $8.4-million contract with Bank of America during which MSU gave the bank information on students, alumni, sports ticket holders and employees. That contract expired in June.

Terry Livermore, manager of university licensing programs at MSU, said Michigan State does not have a new contract with Bank of America or another bank. The old contract with Bank of America was temporarily extended as a service to current cardholders, he said.

He said Bank of America would not have a table at MSU games this fall.

Christine Lindstrom, higher education program director for the U.S. Public Interest Research Group, said aggressive marketing is likely to end once credit card companies must review a student's ability to pay off that card, just like an adult would be treated.

Bank of America said it has not marketed credit cards at most types of student events at either the University of Michigan or Michigan State for some time and has no plans to do so.

Betty Riess, a spokeswoman for Bank of America, said the bank has marketed credit cards at the University of Michigan and MSU athletic events where she said the target audience would be alumni and other nonstudents.

Central Michigan University has an affinity agreement with Bank of America, too, where the university receives extra money based on the card transactions. The card is marketed to alumni.

But Steven Smith, director of public relations for CMU, said credit card companies aren't as interested in marketing at Central anymore, in part, because the university has banned the use of giveaways.

Does a free sweatshirt or sandwich really tempt a student to open up a credit card?
Ben Saukas, 24, remembers all sorts of credit card giveaways to get students to open a card at the University of Michigan five or six years ago.

He never signed up for a card to get a gift_and he didn't take on any credit card debt as an undergraduate.

Then, he went to law school at Arizona State University. Saukas has about $2,000 in credit card debt and expects to graduate from law school in 2010 with about $120,000 in student loans and other debt.

While Saukas said the new rules seem well-intentioned, he said people are adults at 18 years old and should be able to get a modest line of credit.

The real issue, as he sees it, is the excessive credit that can be given to students who don't have full-time professional jobs. He has about $25,000 in available credit on his cards -- and he's still in law school.

"Why are you giving an 18- to 21-year-old more than $500 to $1,000 in credit?" Saukas said.