Students are the primary target of credit card issuers seeking to expand their membership. As evidenced by studies conducted by Sallie Mae, credit card debt held by students continues to rise.
A unique program offered at California State University, Chico provides credit counseling to students. It is known as Credit CATS, or Credit Counseling Aimed Toward Students.
This partnership between the Finance Club and the Students in Free Enterprise Team works to help students understand the complexities of credit and debt. According to Alex Cassidy, Finance Club president, Credit CATS will focus on understanding credit cards, annual percentage rates, loans, credit scores, retirement accounts and general savings.
Credit CATS represents one of the first major efforts by student groups to actually address the credit needs of students. Students are realizing that they must take control of their financial future before they become trapped in a cycle of credit card debt.
Many university leaders still do not understand the seriousness of the situation that credit cards can cause. Some assume that three or four thousand dollars worth of credit card debt is minor compared to the tens of thousands of dollars in student loans held by graduates.
However, credit card debt is much more difficult to manage than student loans. You cannot defer payments, there are no forbearance options and the credit repercussions of missed payments are much more severe.
Credit cards carry much higher interest rates. They also have high late fees and over-the-limit fees. In addition, minimum payments can increase quickly as balances and interest rates increase, and as nuisance fees are assessed.
In the 1990’s, colleges and universities embraced credit card companies on campuses because of the additional money that they gave to the schools. However, in recent years, some colleges have realized how debt-ridden graduates are unable to provide substantial donations to their alma mater.
What Credit CATS does is it recognizes that students must help themselves. Most university leaders were in school prior to the explosive growth of credit card solicitation and debt in the 1990’s. They simply did not have that experience, and fail to recognize how much of a burden credit card debt places on their graduates.
The problem that students face is that financial literacy in secondary schools as well as universities is virtually nonexistent. Apparently a well rounded education ignores one of the biggest impacts on the lives of students and graduates–finances.
Instead, students learn through the school of hard knocks. Once they finally get it, they have paid hundred or thousands of dollars in interest and fees. Some struggle with debt or bad credit for years. Worse yet, some never learn their lesson.
Our hats are off to the Credit CATS organizers at Chico State. Unless universities begin to include basic financial literacy as an early requirement, the only hope most students will have is to get help from programs like this one.
Tags: Credit CATS, Credit Counseling Aimed Toward Students