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The Daily Tar Heel

Law takes charge

Credit card debt among college students a major problem; new law good step in addressing issue

The U.S. Congress was right to pass legislation limiting credit card availability to students under 21.

Currently, nearly any 18-year-old can get a credit card. But after Feb. 22, anyone younger than 21 will have to show proof of income to obtain a credit card in his or her name. Those without proof of income will need a cosigner who is at least 21.

The change is necessary, even though this new law limits the financial freedom of younger college students, because they simply aren’t handling credit cards well.

Sallie Mae — one of the nation’s leading student loan providers — released a report in April that detailed how undergraduates use credit cards. It was pretty bleak.

According to the report, 84 percent of undergraduates have a credit card. That’s not surprising. What is surprising is that undergraduates have an average of 4.6 credit cards.

And undergraduates have record-high balances on their cards. The average credit card balance among undergraduates is $3,173, and 21 percent of undergraduates had balances between $3,000 and $7,000.

What’s worse is that 82 percent of undergraduates didn’t pay their balances off each month, and they were charged for it.

These data show out-of-control credit-card habits among college students.

College is the time to learn how to live independently, and students need to be able to make mistakes.

But having such high credit card balances shouldn’t be one of those mistakes. Not being able to pay off debt can make it impossible to get other necessary loans for something like a car or an apartment.

The study also showed that nearly one-fifth of seniors have balances greater than $7,000.

That’s a crushing amount of debt to attempt to pay off after school. And when people get bogged down in debt payments, it creates trouble for the nation’s economy.

This new legislation might seem like a serious curtail of the financial freedom of college students. But students haven’t shown themselves capable of paying off their credit cards. Congress was right to act to fix that problem.

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