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Lenders, colleges ignore Credit CARD Act provisions

College students have traditionally been prime targets for predatory lenders looking for an easy buck. These young people are often undereducated about financial planning, and they can be lured into credit card agreements. Even though new laws have been established to prevent these predatory practices, a new report suggests that credit card companies are still leading young people down a treacherous financial road that can end in personal bankruptcy.

Adults younger than 21 were slated to receive additional protections from the Credit Card Accountability, Responsibility and Disclosure Act passed by Congress in 2010, but it appears that those benefits have yet to be realized. According to a new academic study, nearly 70 percent of college students younger than 21 have received credit card solicitations in their own name during the past year. An additional 40 percent of students reported seeing their classmates receive gifts in exchange for signing up for credit cards, which is prohibited by the Credit CARD Act. Finally, nearly a third of students said they were allowed to list their student loan money as income on a credit card application.

The study revealed that many colleges have failed to change policies relating to marketing agreements with credit card companies. Only 64 percent of institutions had changed their policies to comply with the legislation, according to the research.

Advocates say that the federal government is not truly concerned with protecting young people from predatory lending practices. If they were staunchly opposed to those practices, Congress would have made it illegal to solicit business from any student younger than 21. The Credit CARD Act would be much stronger if it explicitly prohibited credit card companies from mailing solicitations to young students, they say.

Consumer advocates have also said that extraordinary credit card debt combining with student loan debt is hindering the most recent crop of graduates from becoming financially independent.

Source: Debtmerica, "Lenders still targeting college kids with marketing despite laws," Staff reports, April 25, 2012

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