State Senator Thomas P. Gaffey (D-Meriden), Senate Chair of the legislature’s Education Committee welcomed the governor’s signature indicating formal enactment of the new law to restrict on-campus solicitation of college students by credit card companies. Senator Gaffey said he has long considered high-pressure sales tactics on college campuses a form of predatory lending with little regard on the part of issuers for the long-term consequences for overextended students.
The new law, co-sponsored by Senator Gaffey, was passed — unanimously — by two legislative committees, received a rare unanimous vote of approval in the House, and was passed — again, unanimously — by the Senate.
“Several factors prompt an urgent need for such restrictions, including the relative inexperience of first-time credit card users and their unfamiliarity with the consequences of bad credit, Senator Gaffey said. “In addition, many credit card companies offer enticing incentives to lure first-time borrowers but then immediately turn around and charge high interest rates, citing a lack of credit history among young people.”
“More disturbing is increasing evidence that credit lines are automatically extended when the minimum amount due each month is paid when college students usually have only a modest income, if any at all, and very rarely any increased earnings to justify higher credit limits,” Senator Gaffey added. “We must help prevent students from accruing charges based upon how much they’re allowed to borrow, rather than how much they can afford, to keep them from wondering how they ‘suddenly’ wound up in so much debt.”
New policies regulating credit card solicitation on public college campuses include registration with the administration before marketing on-campus and distribution of credit card education material along with certain restrictions regarding access to students. The new law also prevents credit card companies from pursuing a student’s parents or guardians for uncollected student debt unless the credit agreement specifically allows for it.
“The intention of this new law is to protect students from jeopardizing their personal finances for the long-term by restricting access in the early years of their financial independence by overeager and sometimes unscrupulous lenders,” Senator Gaffey concluded.
Categories: Thomas Gaffey
