The Washington Post reported on a new way that banks are taking advantage of people – in this case, college students.
Shortly after students show up on campus, they receive a welcome letter that contains a MasterCard from a company called Higher One. But this isn’t your run-of-the-mill credit card. It’s a card that accesses student loans. That’s right, students can use the cards to add debt to their student loans that they already can’t afford. Not only that, but the cards also come with high fees.
So this company is essentially targeting kids who are in debt and have no money of their own (Right? Or they wouldn’t have a loan.), is encouraging them to spend more money they don’t have, and then topping it all off with high fees.
This is genius! Why hasn’t someone thought of this before? Let’s get all of our graduating students in horribly desperate situations and send them out into the workforce. That ought to make for some open-minded, creative, happy workers.
According to the report, college officials contend that the loan cards make it easier for administrators and can provide income for cash-strapped schools. So… let’s get students further in debt so the school can make more money? This is ridiculous!
The article goes on to quote Anne Gross, legislative affairs director for the National Association of College and University Business Officers, as saying, “Sometimes people are looking for evil intent where there is none.” Riiiiiiiiight, because this plan is angelic!
If you’re a parent of a college student or a soon-to-be college student, there are three things you can do to avoid the college debt trap:
- Edumacate ‘em – It is your duty to make sure your kids leave your house as responsible adults. Please tell me you’re not expecting the school to do that. Make sure that they understand how to handle money by budgeting and living on less than they make.
- Scare ‘em – Do everything you can to teach them the dangers of debt. Show them how they are going to be tempted, and basically attacked, by offers that sound really good but will make them slaves to debt.
- Hit ‘em – On their cell phone, that is. Make a point to stay in touch with your kids and hold them accountable. You want to know what they’re doing in their relationships and if they’re staying out of trouble. It’s the same with money. Ask them how they’re doing financially and find out if they’ve been approached about debt. It will train them to always be on the lookout.
On top of all of this, pray! I promise, you can’t do too much of that. Think about the pitfalls you constantly had to navigate at their age – and then multiply them by 10!
Question: What great advice do you have for students starting out?