Industry critics cite students' lack of financial knowledge as one reason to curb the sale of credit cards to college students. For example, about 22 percent of students surveyed by Sallie Mae in 2009 were frequently surprised at the size of their credit-card balances. Forty percent of those surveyed either frequently or sometimes used credit cards knowing that they couldn't afford the items or pay the resulting bills.
Credit-card marketing campaigns encourage short-term thinking and instant gratification -- for example, the ability to buy whatever the user wants right away. According to the Fall 2005 issue of NYU's "Journal of Legislation and Public Policy," once the feeling that credit cards are "free money" wears off, students become vulnerable to depression, shame and other psychological stresses. In a study of 4,000 Oklahoma students cited by the Journal, about a third reported that stress over credit-card debt had affected concentration on academic course work.
Another criticism raised against marketing credit cards to students is the growing trend of students' charging college and non-college costs, which promotes risky spending habits. Thirty percent of students surveyed by Sallie Mae charged some part of their tuition because they lacked sufficient financial aid. The survey showed a similar pattern emerging for non-college goods and services. Students were most likely to charge food, clothing and cosmetics, followed by car repairs and non-commuter travel expenses.
Credit-card debt doesn't only affect college students. Some lenders demand a cosigner, which makes family members liable for past-due bills. This arrangement can damage the cosigner's credit, since the student's card becomes the adult's obligation, "Forbes" magazine reported in February 2010. As a result, parental cosigners have been forced to tap retirement accounts, among other assets, to help children who default on credit cards.
A final factor to consider in allowing students to rack up debt is that it shrinks educational opportunities. High credit-card bills force students to work extra hours, which hurts grades, the Journal notes. Students are also less likely to participate in extracurricular activities and internships. The resulting debt burden can also push students to make choices that aren't in their best interest, such as reducing credit loads and delaying graduation.