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Watch
out for the black hole of credit card debt
By
Clarissa Segovia
Online Forty-Niner
Staff Writer
Credit
card debt is not only the cause of stress
for many students, for 18-year-old Mitzi
Poole, credit card debt proved to be fatal.
After accumulating $2500 in debt, the University
of Central Oklahoma freshman was found dead
in her dormitory after committing suicide,
her credit card bills and checkbook lay
on her bed. Apparently, Poole felt that
there was no way out of debt besides death.
Unfortunately,
debt for many students is a reality. Unlike
past generations, when the only debt that
students walked away with after receiving
their diploma was debt from school loans,
now most students also have credit card
debt.
With
the rising cost of higher education, many
students apply for credit cards not realizing
what they are really signing up for. Thomas
Yontz, a 29-year-old senior at Cal State
Long Beach says that when he was first approached
to apply for a credit card, six years ago,
he felt like he had nothing to lose. Now
Yontz is in $10,000 of credit card debt
in addition to his school loans and says
that was the biggest mistake of his life.
"If I knew then what I know now I never
would have signed up. I got a t-shirt and
bills that I will keep paying for at least
two more years."
What
may help students avoid making the same
mistake that Yontz made is The Student Financial
Responsibility Act, enacted in 2002. This
bill prohibits credit card companies from
offering free gifts to students for filling
out an application. Also, credit card companies
are now required to consult with schools
in order for the amount of credit card vendors
to be limited.
Kathy
Kristof, financial writer for the Los Angeles
Times says that there are some programs
that are good resources for people that
would like to be better informed about credit
card debt, but it is necessary to be weary
about the companies that are claiming to
want to help those in debt, often they are
the companies that are getting you into
debt. Kristof, who has been writing for
the Times since 1989 says that statistically
student debt has become more severe and
it is vitally important that students become
educated on the subject of debt.
The
California Student Debt Resource Awareness
Project (CASDRAP), which was responsible
for implementing The Student Financial Responsibility
Act, has recently launched a website (www.studentdebthelp.org)
that provides comprehensive educational
resources on debt and money issues for students,
parents and administrators. Unlike many
other resources on the internet that are
funded by credit card companies, this site
was started with the seed money given to
the project from EdFund, provider of student
loan services.
The
amount of time that it takes to pay off
a $1000 credit card debt at 20 percent A.P.R
and only making the minimum payment of $25
a month would be 65 months - that is over
five years! Yvonne Chang, a graduating business
major may have been taught the best lesson
of all by her parents when they told her
as she went off to college to always remember
"if you don't have the cash—you
can't afford it." For many students
who were not fortunate to learn this lesson—it
is the most expensive lesson that they will
ever learn.
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