Assembly Bill 521 helps prevent college student credit debt

By Arj Arjunan
Daily Bruin Reporter

After spending the summer going through the state assembly and
senate, a bill designed to help keep students out of credit card
debt was signed by Gov. Gray Davis on Sept. 13.

Assembly Bill 521, written by assemblyman Paul Koretz, who
represents the district which includes UCLA, will prohibit the
distribution of free gifts to students who apply for a credit card
and will require debt education in college and university
orientation programs.

“I applaud Davis for recognizing that something must be
done to stop the credit card industry from preying upon young
people in college,” Koretz said in a statement after the bill
was signed.

AB 521 also forces credit card vendors to register with college
and university administrations and limits the number of tabling
sites.

Rising student credit card debt prompted Koretz to introduce the
bill, known as the Student Financial Protection and Responsibility
Act.

Campaigning for the bill at UCLA began in April when a handful
of UCLA students joined Koretz’s chief of staff, Scott
Svonkin, and consumer advocates from California Public Interest
Research Group on the steps of Kerckhoff Hall to push for support
for the bill.

“It is ridiculous for them to make offers to students.
They know we don’t have jobs. They know we don’t have
any means of paying back thousands of dollars of debt,” Nick
Lazzarini, now a second-year history student, said in front of
Kerckhoff in April.

About a week before the bill was signed, Koretz said credit card
companies often approve student applications even when students
fail to provide evidence of credit worthiness.

Card companies would target freshmen who apply in order to get
free T-shirts, cups and other promotional items, he said.

Koretz also said prohibiting the free gifts will eliminate a
large number of students from applying, thereby reducing the number
that accumulate unnecessary credit card debt.

Before the bill’s passage, UCLA had already placed
limitations on free gifts as part of a university policy instituted
three years ago that restricts solicitors from gathering
students’ personal information, according to Kenn Heller,
associate director of UCLA’s Center for Student
Programming.

CSP prevented credit card companies from distributing free gifts
to students who apply for credit cards on site, he said.

But UCLA’s status as a public university, Heller said, has
limited its ability to legally restrict solicitors on campus.

“We can’t restrict content,” he said before
the bill was signed. “We can only determine the time and
place in which people solicit.”

Even with the bill’s passage, the presence of credit card
companies on campus will not be completely eliminated.

MBNA, the largest independent credit card issuer, has entered
into an agreement with the UCLA Alumni Association that allows it
to offer applications and market at certain campus events, like
UCLA’s Jazz and Reggae Festival, Heller said.

Tammy Matthews, a customer service representative with MBNA,
said the Alumni Association receives a small percentage of the
company’s revenue as part of a contractual agreement.

Additionally, ASUCLA also has an agreement with Connect2one, a
company that organizes and distributes the inserts for bookstore
bags.

Besides advertisements for magazine subscriptions and phone
cards, the Connect2one’s inserts regularly contain student
credit card applications, said Robin Broudy, general manager of the
UCLA Store in Ackerman Union.

Chris Dowding, a third-year psychology student, said credit card
tabling, bookstore promotions and advertisements on message boards
around campus in the past gave credit card companies a strong
presence on campus.

Dowding, who signed up for the Alumni Association’s MBNA
Visa during his first year, said the company entices students with
a card that has a picture of Royce Hall and the logo of the UCLA
Alumni Association.

While credit cards give students the opportunity to establish
credit, students need to be careful, Dowding said.

“Students shouldn’t be hidden from the real
world,” he said. “But they need to understand the
consequences of credit card debt.”

Koretz said credit should be available to those who can
establish their credit worthiness through proof of a job or a
parent’s co-signature.

He also said mandatory debt education in orientation programs
will introduce students to the consequences of irresponsible credit
card use.

“It’s great to establish credit, but (credit card
companies) are putting unsuspecting kids at risk,” he
said.

With reports from Kelly Rayburn, Daily Bruin Senior Staff.