Federal Trade Commission with BU, NU, Suffolk, & UMass Boston Launch Credit Smarts for Boston Students


The Federal Trade Commission’s Northeast Regional Office in New York City has teamed up with Boston University, Northeastern University, Suffolk University, UMass Boston and college lender Nellie Mae to launch "Project Credit Smarts 2002" -- to educate Boston area students about credit card use, its dangers and pitfalls -- at a press conference on Wednesday, September 4th from 11:00 to 11:45 a.m. at Boston University Campus, 775 Commonwealth Avenue, Boston, on the plaza in front of the Sherman Student Union Building

Almost 200,000 students come to the Boston metro area’s colleges and universities -- over 25,000 as freshmen. These teens are targets for high pressure -- and sometimes unscrupulous -- credit card offers. The FTC -- in partnership with BU, NU, Suffolk, UMass Boston and Nellie Mae -- is launching "Project Credit Smarts" -- a crash course for freshmen and other students on surviving the high pressure tactics of credit card promoters. "Students are not aware that late payments or defaults on credit cards can negatively impact job opportunities for years to come," says Lilly La Branche, a Northeastern sophomore who will speak about her credit card experience at the BU event.

Credit card companies target students aged 16 to 18 as new customers and many companies duke it out on university campuses nationwide to sign up students. According to a recent study by Nellie Mae, a national student loan financing organization, 83% of under grads have at least one credit card, the average credit card balance for college students last year was $2,327, and the median debt increased by 43%. The percent of students carrying high-level credit card debt has increased dramatically -- 1 in 5 students carries between $3,000 and $7,000 of credit card debt.

"Credit cards are a student’s double-edged sword -- useful to pay for school necessities, yet a hazard for those who aren’t credit savvy," says Barbara Anthony, the FTC’s Northeast Regional Director. Anthony adds, "Freshmen are literally ‘rushed’ -- bombarded by marketers with aggressive offers of easy credit." Look at what a typical freshman -- who may have no experience living alone -- faces:

    * Some companies set up tables on- or off-campus as school starts, luring students with goodies like "free" t-shirts, CD holders, toys and candy -- not so hot a deal when many card issuers charge an annual fee of $15 to $55.
    * Students hooked by initial low interest rates can incur crippling charges when rates go up.
    * If a student charges $2,000 on a card with 18.5% interest, and pays a low minimum monthly payment, it would take over 11 years to pay off the debt and cost an additional $1,934 just in interest -- almost double the cost of the original purchase.

"We take the issue of credit card misuse very seriously because its consequences to our student are both financially and emotionally devastating," says Dr. Richard M. Freeland, President of Northeastern University. Dr. Freeland adds, "Given the aggressiveness of credit card marketing to young people, and that it’s too easy to get one and rack up large bills without realizing it, this topic is one that should be discussed on all college campuses in Boston and throughout the country. We certainly plan to discuss it on ours."

According to W. Norman Johnson, Vice President and Dean of Students at Boston University, "Your college degree is worth more if you do not owe thousands of dollars in credit card bills. Paying off excessive credit card debt upon graduation may limit your opportunities for employment, relocation and choices of living arrangement."

" In the effort to educate students about healthy decision making, colleges need to address personal financial management," says Dr. Nancy C. Stoll, Dean of Students, Suffolk University.

"College students are often inexperienced with consumer credit, running up large credit card balances, applying for too many cards, hurting their credit ratings and subsequently struggling under a load of debt," says Chancellor Jo Ann Gora, UMass Boston. Gora adds, "it is in everyone’s interest to have our students better informed on these matters, and I am delighted to support the FTC’s program to address this need."

"Nellie Mae’s goal in publishing its credit card study is to underscore the importance of educating college students about using credit effectively, weighing their spending decisions, and considering their source of borrowing," says Nina Prikazsky, Vice President of Operations, Nellie Mae.

College kids can get "credit smart" by remembering the following "plastic pointers":

    * Credit cards are just like a loan -- you have to pay back what you owe, plus interest.
    * Don’t succumb to high-pressure sales tactics.
    * Check the interest rate, and watch out for low introductory rates that go up later.
    * Avoid snowballing debt by paying your balance in full each month.
    * Consult your financial aid officer about alternatives such as lower interest rate school loans and short-term installment plans with no interest. Sign up for credit card awareness courses.

And Credit Smarts is not just for students. In the wake of recent business scandals and the plunging stock market, all consumers, now more than ever, need to exercise control over their finances. Beth Kobliner, best-selling author and financial news commentator, will be on hand to offer consumer tips on how to control spending and debt.

To get free information or further assistance, visit the FTC’s website at: www.ftc.gov

Attorney Assistant Regional Director Communications Liaison
(212) 607-2834 (212) 607-2802 (212)607-2807

ALLEN WARD - Assistant Dean of Students (617) 353-6310

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