Credit reform means new era for college students

[xavier132487]

I also believe the younger kids are made aware of how to use a credit card in a smart way, the less abuse there will be, but remember that most adults can't even handle a credit card so how can they ever teach their kids how to use one in a responsible way.....

This is definitely a problem. IMO, just like sex ed and drug ed, I think financial ed and driver's ed should be required. You'll have those that'll listen and those that'll touch the stove. Either way, you've given them the education for credit and financial stability. You can't force them to use it, unfortunately.

[xavier132487]

I agree that people should have to have the ability to repay.

I definitely agree with you! No problem with income requirements here, but it should be required for everyone, not just a certain age group!

[Bob from down south]

Originally Posted by runningncircles1

No, they don't have the same binging that we have here. And, yes, they ARE more responsible with driving. I can attest. Go there sometime and rent a car. There are no cup holders for the drivers because the over there, when you drive, you drive. You do nothing else. Period. Driving school is compulsory there, and it can cost upwards of $1000-1500 to get a license overall. The German Autobahn, for example, has higher speed limits but less crashes per capita than American freeways. Believe me, the drivers there are more responsible with driving.

I lived above a Gästhaus in Germany for three years, and I saw plenty of binge drinking going on. The arched passageway that led into the courtyard in front was full of paint scrapes from drunk patrons reeling out of the place and sideswiping the walls on the way out.

And Europeans might have less crashes per capita than Americans, but they also drive much less per capita than Americans, as they have decent public transportation systems, their cities and towns are organized so that you don't need to drive 5 miles to get groceries, etc. And fuel prices are double or triple what they are here. The number of accidents per mile driven would tell a different story. The Germans are aggressive to a fault, the Italians drive with utter disregard for the rules (5 lanes of traffic on a 3-lane road, wrong-way up one way streets etc etc). But an accident at 25 mph in a congested city area is a different thing than 45 mph on a US street.

Originally Posted by runningncircles1

Binge drinking is considered rude as well. It shows that you do not care about how you present yourself to your peers and friends. It is not seen in the amount it is here in the states.

Anyone that thinks the Europeans don't have a tremendous drinking and drug problem in their societies has never spent much time there. They do.

Originally Posted by runningncircles1

Again, you're assuming everyone should go to college. Get this idea out of your head! And, no, you do not need to "protect those who are naive" and I find it insulting that you think anyone not middle-aged as invalid and unable to use their brain. When you're 18, you're an adult. Period. You need to make decisions on your own and cut the damn cord from the helicopter parents. You might (and probably will) make mistakes, as you should have the right to. And, "enslave?" Really? Because people force you to charge up those shoes you don't need, or go out to restaurants. Or charge more on your card in one month than you make in two? When I got a credit card at 18, I knew I had to pay back the money I spend on it. I even asked my banker "what are the catches." He told me outright about my interest rates, penalties, and my right to question my statements at anytime. It's not hard to fathom. This isn't MY money, it belongs to a collective group of bank customers who are entrusting the bank to loan out the money with interest, some of which will go into their accounts. You get to use the money, it has interest on it. If you pay it back in full at the end of each month, you owe nothing. If you keep it on there for any period of time, you pay interest depending on the amount of time on there. I didn't need Calculus, DiffEq, Stats, or any complex math or finance to figure it out. Just common sense and general arithmetic.

Although I am more in agreement with you here than not, when a bank makes loans using other peoples' money with no regard for the risk of not being repaid, then one entire side of the regulation mechanism is gone. Then add in a bankruptcy code that makes it trivially easy to run up those easy lines of credit and then walk away from the obligation, and the other side is shot. It's running out of control...

Originally Posted by runningncircles1

97% of whether someone is financially fit or not is a question of will power. One percent is for if they are competent or not (and, most 18+ year olds are competent enough to understand a contract, especially if they're in college). Another two percent depends on personal circumstances such as medical and family hardships. But, for the most part, restraint and will power make up how credit worthy and financially fit someone is, and it doesn't change much with age (ask my father). If you're not able to control yourself financially at age 18 with a certain set of consequences, you won't be able to at 40.

86.3% of all statistics are made-up.

I think it's two-thirds self-discipline, and about a third practical education. Most kids go to school and get hundreds of hours of classroom time on Martin Luther King and the civil rights movement, homosexuality and other forms of moral depravity as "lifestyle choices," how to play a mean game of volleyball or soccer, how to appreciate gang graffiti as urban art, or how to play an oboe or bass drum and march around in a band looking like a guard at Buckingham palace--but they get no education on how to manage money. If they did understand debt and the implications of exponential math on servicing it, they'd seriously balk at the idea of going $100,000 or more into debt for a college degree in music, art, or history. You can work a minimum wage job at Waldenbooks just as well without the degree (and the massive debt) as with it.

Originally Posted by runningncircles1

Sorry, but if they're naive enough to fall prey to a simple credit card contract, then maybe they can be fooled into assisting someone in robbing a liquor store. I mean according to your theory, it's the same thing: someone convincing them of free money. Then, they get said free money not realizing the strings attached. They go to court and PAY for it by being ENSLAVED to a system (jail). They were too naive to ask how they would get this money in the first place and if there were any catches.

The previous and current administration have solidly reinforced the concept of free money. If the banksters don't need to suffer the consequences of their bad decisions, why should anyone else? When a corporation turns its back on a contract obligation because it later decides the terms are not in its best interest, it's called "a business decision." Now those same thieves...the same ones that paid themselves $billions skimming bonus money from the company coffers to shut down factories in the US to ship the jobs to India, China, etc, want you to believe that an individual living by the same low moral character is making something different than "a business decision" when he walks away from his mortgage and credit card debt. It's all based on a rotted-out moral base, and systemic acceptance of corruption and dishonesty as an acceptable business practice. We've worshipped "tolerance" as the ultimate virtue, to the point of tolerating massive undermining of the trusts and confidences needed to make an economy or a society work.

We're in a really bad place, and the solution is ultimately not an economic one. Borrowing and lending is a tremendously risky undertaking when none of the players feel any obligation to live up to the agreements they make. We destroyed pension plans and replaced them with a system that funnels money to markets which are rigged by priveleged insiders, and most of the people investing for retirement understand next to nothing about the markets and the risks they are forced to take by putting their money into the hands of thieves.

If we don't pull out of our moral crash dive, the rest is just rearranging deck chairs on the Titanic. We can't legislate or adjudicate trust or personal responsibility in Congress or in the courts. That happens in the living room, but I think people are too busy watching "Wife Swap" and "Millionaire Matchmaker" to teach their kids what's really important. And the schools sure as hell aren't doing it, either.

[70Ford]

Originally Posted by runningncircles1

Then, why say that someone is an adult at age 18 if they're too naive to handle their own finances? You haven't addressed this yet.

Because we'd like to have legal sex with them, sometime.

//just saying

[Stac2007]

The banks got what they deserved by giving college age kids credit cards, which many of which never earned a dime. They were hoping to lock these kids into a life of debt starting at an early age. I guess this is the way the banks like to make their money.

[user_id]

Originally Posted by runningncircles1

The cup holders story was to illustrate the seriousness of driving there.

But it has nothing to do with the "seriousness of driving". Feel free to cite data that shows Europeans drive more safely than Americans (accounting of course for the increased use of public transit in Europe).

Originally Posted by runningncircles1

Eastern Europe is much different than Western Europe. It's full of poverty and social problems, thus alcoholism. That's like saying the US has no binge drinking problems because Utah doesn't have a lot of drinkers. It isn't based on my "preconceived" notion of the world, it's based on experience living there. Sorry, but the US loves binging more than Western Europe.

Yes, its based on your preconceived notion. I don't care about you living there, that is not data. All you have to do is look this up and you'll see that the Vodka belt (which includes MORE than just Eastern European countries!) has higher rates of binge drinking than the US, the "Beer belt" has similar rates as the US and the "Wine belt" which tends to have longer rates.

Treating Europe (or Western Europe) with one brush is not accurate here.

Originally Posted by runningncircles1

Then, why say that someone is an adult at age 18 if they're too naive to handle their own finances? You haven't addressed this yet.

This is really simple. Kids tend not to even think about finance until they are around 18, because before then they are in high school living off their parents.

Marking some age as the age in which you become an "adult" in every respect makes little sense. You need to take into consideration the way people actually develop.

Originally Posted by runningncircles1

I'm fine with requiring credit card companies to get proof of income, but it should be required for EVERYONE. I don't know how you can disagree with this.

Because it does not make sense for a fairly large class of adults, namely those living off assets and not wages.

Originally Posted by runningncircles1

Again, assuming anyone 18-20 is in college.

Again, I have no such assumption. The new law does not effect people under 21 that are working instead of in college. All they have to do is provide proof of income, a rather simple matter if you actually have a job.

This law is primarily targeting college students, that is why I'm talking about college students.

Originally Posted by runningncircles1

They miscalculated. It has nothing to do with age. It has to do with rational vs. irrational decision making, or with thinking the current circumstances would last forever.

As I said, most Americans do not manage their finance well. But those under 21 have higher rates of screwing up than those that are older.

Originally Posted by runningncircles1

Others learn from experience. Delaying touching the stove isn't going to prevent it.

You don't learn how to manage your finances over night, that is the point of delaying it. It gives them time to learn.

From what you've said in other posts, you don't seem to be doing so hot yourself.

Originally Posted by runningncircles1

It was to illustrate my point that most of your credit-worthiness is tied to your will power while some of it is circumstantial...

Feel free to actually demonstrate this with you know....data.

Originally Posted by runningncircles1

It is extremely difficult to do this.....

No, it depends on the student loan. Some are rather easy to discharge. For example if the loan is not completely for "qualifying costs", it can be discharged just like credit card debt.

Originally Posted by runningncircles1

I, on the other hand, was talking about private student loans. They are based on credit.

Not all of them. If you allow them to be discharged, they will largely vanish.

Originally Posted by runningncircles1

Currently, Stafford limits with the average financial aid package do not cover the amount of money needed to attend the average four year university.

So don't go to the "average four year university". Go to one that is cheaper. In California you can do 2 years of community college and 2 years at a Calstate for a total cost of around $12k.

Anybody can become a California resident within a year.

Originally Posted by runningncircles1

Universities know this and know that students will pay anything to get that crappy piece of paper saying they went to college.

But students do not have "anything". They rely on student loans. The easy money associated with student loans is the primary reason for the increase in college costs. You deny this, yet support with your comments.

Originally Posted by runningncircles1

Where did you imply that I think everyone is rich? All I said was that the government pumping money (grants AND loans) into tuition and fees at the standard 4 year university without building infrastructure is causing prices to escalate.

Grant money is actually lower than it use to be. It is the loans, and again you denied that the loans were causing the increase in prices.

I have seen little shortage in infrastructure at the universities. How many classes start after 5 at your typical college? Few. The infrastructure is unused for most of the day! You can easily increase enrollment by adding some dorms (rather cheap) and fully utilizing the existing infrastructure until say 10 pm.

This is not to mention many degree programs can be taught with a white board on the grass.

[debtmonger]

The concept of using credit cards for college students to help them get through tough times, seems rather crazy to me. I hope college's are not teaching this concept. The best way to get through tough economic times is... Get a job or two and earn some income. Using credit cards and student loans to get through college, just causes way too many people years of financial hardship. There are way too many unknowns. Is the student going to graduate? If the do, will they be able to find a job in their field of study? Education is great, but the school the student picks should be affordable and the tuition should be cash flowed, not borrowed.

[elamigo]

Are they adults? It is safe to say they are. If they get in financial trouble, let them have that choice. Can we tell them they cannot have sex because they can get STDs and that is costly or get pregnant and that is costly too? No. The same with credit cards. Let them learn, not baby seat them.

Let the credit companies promote their business. If they want to set an initial limit, OK. The credit companies would think twice giving credit cards if they knew mom and dad will not bail their sons and daughters out of the whole they got into.
We told our daughter that just graduated that she was fully responsible for any debts she may incur. She took note of our warning and did not abuse her card. She even allowed my wife to monitor her expenses and was receptive to any possible red flags my wife would see.

We did not sign any type of collateral for her card. She was totally on her own on that issue.

To me that is a problem today. I notice these young men and women are being called kids whenever they do this and other things thta show lack of responsibility as if people want to excuse them. There is not excuse. They get in debt? They pay just as any other adult. I made my mistakes when I was young and paid the price but I learned also. Denying them their chance to make their mistakes is denying them the opportunity to learn and grow.

You have a great day.
El Amigo