Youth and Money
Money Matters - Give that college- bound kid credit card training
By Stephen OhlemacherPlain Dealer Bureau
August 19, 2000
If you're a parent of a college student, two of the most precious parts of your life are about to depart for the new school year - your child and your money. Talking about the second with the first is the best way to preserve your relationship with both, advisers said. Credit card use is a key issue, they said.
Nearly 80 percent of colleges allow on-campus credit card solicitations, said Howard Dvorkin, president of Consolidated Credit Counseling Services, a not-for-profit agency in Fort Lauderdale, Fla. "The credit card companies look at these college students as an extremely lucrative market," he said. "It's low risk, balances are relatively small and if a kid gets in trouble, usually the parents will try to bail him out."
Issuing cards to students also lays the groundwork for them to be customers after they graduate - college graduates tend to be among the more affluent cardholders, Dvorkin said. And, after a student reaches age 18, there is little to stop him from getting a credit card, he said.
Consolidated Credit Counseling Services puts out a free program for teaching students money basics - Budgeting 101. It is available on the company's Web site - - or by calling (800) 728-3632, Dvorkin said.
For many students, a credit card in the parent's name with a limited balance available for emergency use is the best solution, Dvorkin said. "I'm pretty old-school," he said. "I don't think college kids who don't have jobs should have credit cards." For those who do, Dvorkin recommended a secured card. The student or parent makes a deposit in an account to back the credit line, and that limits the amount a student can charge, he explained.
When a student gets a credit card, Dvorkin said, he and his parents should work out a plan for how the card should be used. The ideal scenario, Fedinec said, would be to reserve the credit card for emergencies.
Taking the card away "is not a viable alternative if the credit card is issued in the child's name," Dvorkin said. Regardless, Fedinec said, a parent should cut up the credit card until the debt is paid off.
"You would certainly want to take away the privilege, and credit in our society is exactly that. It is a privilege," she said. That's when a prepaid card may be a good option, Flaherty said.
For a parent to pay off the credit card balance is not a good idea - it won't correct the overspending problem, Dvorkin said. "The best way is to make the child hurt (financially)," he said. That means making the student pay off the debt so he learns by his mistakes, Fedinec said. But, that must be part of a balancing act - if you are too harsh in repayment demands or timetables, your child may have to take a part-time job, interfering with his studies, or may drop out of school, she said.
Prevention is the best way to head off such problems, Dvorkin said. "Parents need to make sure the student is aware of what's going on and has enough education and knowledge that it won't happen again," he said.
