By Michele Richinik, News Staff

Northeastern students must soon’ say goodbye to the free T-shirts, frisbees, beach towels, and food that credit card companies often give away as promotional items on college campuses. New credit card legislation recently signed by President Barack Obama includes provisions that will regulate the marketing of unsolicited credit card offers to many college students.
With the Credit Cardholders’ Bill of Rights Act of 2009, creditors won’t be allowed to market on college campuses where there are people under 21 years old beginning on Feb. 22, 2010.
Ben Woolsey, director of marketing and consumer research for creditcards.com, a site that helps customers compare credit card rates and policies, said the underlying intent of the bill is to keep credit card issuers away from younger students who are at risk of falling into debt and endangering their credit.
‘Students want what [the companies] are offering, as opposed to really needing a credit card,’ he said. ‘[The bill will] shield younger students from these offers and make sure they don’t get into debt under their heads at a time when they have little or no income.’
Among the provisions, creditors will be prohibited from providing credit cards to consumers under the age of 21 unless the individuals have a parent or guardian co-sign the credit card application, according to a press release from creditcards.com. Creditors will also be prohibited from opening a credit card account for any college student who does not have any verifiable annual gross income.
Before the new regulations, banks paid millions of dollars for the right to market credit to students and alumni. The bill will require disclosure of the relationships between banks and colleges, according to the release.
Losses are typically high on a student’s credit portfolio because younger people ‘get over their head,’ and interest rates tend to be higher with young people, Woolsey said.
‘College campus marketing is not a massive part of their business, but they really like to get to be the first credit card with the student because they know that, statistically, people tend to keep their first credit card for a very long time. So it tends to be a long-term profitable relationship for the bank,’ Woolsey said.
Jaclyn Fletcher, a middler accounting major, said the companies’ promotional items and discounts would lure her in to open up a credit card account.
‘[The new bill] won’t really matter though because people at our age will ask their parents for help anyways,’ she said. ‘Even though parents didn’t have to sign it before, [I] still asked for their opinion anyway.’
Card issuers are not currently constrained from being on campuses.
‘It will be interesting to see if they are racketing up their marketing while they can, or if they are trying to stay low key and trying not to attract much attention,’ Woolsey said.
People under 21 will still be able to build their credit history even under a cosigner, but the cosigner will have a view into the account.
‘The bottom line is the student can still get access to credit, it’s just there will be more hoops to jump through and less privacy,’ Woolsey said. ‘I think the intent behind the law is good, but from a negative standpoint, the kids who could normally handle credit responsibly … will be denied that financial independence.’
Megan Beaver, a freshman behavioral neuroscience major who does not own a credit card, said she thinks students under the age of 21 will still be able to learn about financial responsibility even though there must be a cosigner.
‘If [your parents] are just cosigning on it, it will save your credit if you have problems. But it’s not necessarily like your parents will be paying your bills,’ she said.
Limitations have not yet been clearly defined for how far away from campuses the creditors will be allowed to market to consumers who are at least 21 years old, Woolsey said.
‘[The companies] have tried to market more directly to students at their parents’ addresses, but by losing the on campus direct marketing angle, I think they will have to find some different avenues to get to people,’ he said.
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