Lewisville Texas Bankruptcy Attorney: LEGISLATION PROTECTS COLLEGE STUDENTS FROM PREDATORY LENDING
When I went to college, students didn’t just get degree. They also accumulated huge amounts of credit card debt. Anyone who has attended college during the last ten years can tell you that credit card applications were offered to them everywhere on campus. Credit card companies had booths at school fairs and advertisements on classified boards in common rooms. I even used to find flyers attached to the walls in classrooms. This type of marketing makes a lot of sense. College students are usually poor and in need of money, and they are financially inexperienced and unsophisticated. And when they can’t pay off their credit card debt, one of two things happens. They either go to their parents for money or they default on their debt. Defaulting on a credit card can be very expensive. Upon default, credit card companies raise interest rates, sometimes as high as 30% and charge fees as well. Small balances can become very large very quickly, so that by the time a student has finished college and begun working they are drowning in debt.
Fortunately, recent legislation has been implemented to prevent these types of predatory lending practices. The CARD Act prevents credit card companies from being allowed to consider the student’s parents income when reviewing applications for credit, unless the parent cosigns the application. In addition, credit card companies cannot go on campus to solicit college students. In fact, this legislation states that credit card companies must remain at least 1,000 feet off campus. But for many recent graduates, this legislation is too late. Large credit card balances leave them with few options for relief from their debt.
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