Financial Aid News 120: Student credit cards going away?
Student Financial Aid News
From Inside Higher Ed:
The mayor and some city council members in Providence are floating a proposal to tax students at private colleges $150 each per semester, The Providence Journal reported. The city is facing a large budget deficit. Like local lawmakers elsewhere who urge private colleges to make payments in lieu of property taxes from which they are exempt as nonprofit, Providence officials argue that private college students add to city costs. Students and private colleges leaders are opposing the idea, arguing that students actually add to the local economy. In addition, some note that there are private college students who already own property in the city or whose families do — and who thus may be subject to double taxation under the plan.
Commentary
We’ll see if this flies. If it does gain traction and take off, expect other cities to copy this tax and build in an extra $300 in education expenses to your financial aid calculations.
From the Chronicle of Higher Education:
“The U.S. House of Representatives today passed a consumer-protection bill that would make it illegal to market credit cards to children under the age 18, a segment of the population that includes some college students,” The Chronicle of Higher Education reports. “The legislation, the Credit Cardholders’ Bill of Rights Act of 2009, HR 627, says that ‘no credit card may be knowingly issued to … a consumer who has not attained the age of 18.’ A similar bill in the U.S. Senate would affect more college students. That legislation, S 235, would prohibit companies from issuing credit cards to people under 21, unless they completed a financial-literacy course and had a co-signer.
Commentary
If the legislation passes in the Senate version, the market for student credit cards will obviously be wiped out. While protecting students from debt, it does raise the question – with so many things in life, from apartment rentals to cell phones to insurance plans requiring a credit rating, without access to credit cards, how will students even obtain a credit rating? Student loans usually don’t – most students defer any form of payment until after graduation.
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