topic Re: Subprime Loans Just the Start of Students’ Debt in Student Loans

Subprime Loans Just the Start of Students’ Debt

gdale6 — Sun, 03 Aug 2014 21:26:37 GMT

http://www.wallstreetinsightsandindictments.com/2014/07/subprime-loans-just-start-students-debt/

"This is amazing.

If you’re about to become a college student, if you’re already a college student, or if you’re simply in debt and need more credit and plan on becoming a student again, you’re in luck.

Financial services giants Discover Financial Services Inc. (NYSE: DFS), Capital One Financial Corp. (NYSE: COF), Bank of America Corp. (NYSE: BAC), Citigroup Inc. (NYSE: C), and U.S Bancorp (NYSE: USB), to name a few players in the student credit game, are bending over backward for you.

The folks at Discover want you to “Get the card for college and beyond.” They’ve named and registered it as “Discover it chrome for Students” because, after all, they’re “Looking out for you.”

But they aren’t the only do-gooders looking out for you. You can also apply for the Capital One Journey Student Rewards Credit Card, the Bank of Americard for Students, the U.S. Bank College Visa Card, or the Citi Dividend Platinum Select Visa Card for College Students.

Heck, why not apply for all of them?

But wait.

Before switching screens to sign your life away – I mean, fill those applications out – let me tell you a little more about this latest attempt to take all your money. "

Re: Subprime Loans Just the Start of Students’ Debt

SCF — Mon, 04 Aug 2014 01:39:23 GMT

The marketing of credit cards to students is a long-standing issue - in fact, many of the changes brought about by the CARD act were designed specifically to curb abuses and increase borrower awareness. I think a lot of those changes have gone a long way to helping young borrowers make better choices.

In the context of what's laid out in this article through - I really see no surprising or particularly troublesome behavior from banks here. Students are lucrative, not because they will eventually default (which costs the bank money), but because they DO become long-term customers. Those cards represent fair terms for a group of people with limited income and little to no credit. Many myFICOers trying to rebuild would love to have a card like the Discover Chrome, rather than settling for a rebuilder with no rewards and possibly an annual fee.

Credit cards can be used responsibly, even by students. We can't expect the banks to not market to an important demographic who are legally allowed to borrow money just because some of them will mis-use it and get themselves into trouble. I think we should be focused on educating potential borrowers about responsible credit use, and that the schools have a really important role to play here. Colleges benefit substantially from the easy availability of student loans and credit cards, it drives their profits. And they lose nothing when the student over-reaches and eventually struggles to repay - that strike me as the most unfair part of the bargain.

Re: Subprime Loans Just the Start of Students’ Debt

smith5879 — Tue, 05 Aug 2014 00:14:24 GMT

I agree with what SCF said. Credit cards are an important step to cultivating a good credit score. I got my first credit card before I even started college and have never been late on it. My first credit card and my student loans gave me a pretty good credit score and enabled me to get a car at a decent interest rate and to buy a house in June. I was able to due both of those things just over a year after graduating partially thanks to my credit card giving me almost a 7 year credit history. College is really a good time to build credit because other than student loans, most students probably aren't going to apply for any other credit. Then when students

graduate they have the scores that will get them good interest rates on cars and homes.