The Connecticut Legislature is considering a bill to promote student financial literacy. House Bill 5409 would create a plan to ensure high school students receive financial education before graduation and require universities and credit and debit card issuers provide college students with financial literacy information before they sign up on campus for a credit or debit card.

ConnPIRG Education Fund's 2012 Report, The Campus Debit Card Trap, called national attention to problems associated with debit card agreements between universities and financial institutions. 

College students are prime targets for financial institutions that use confusing, invasive, and even misleading practices to recruit students to buy products and subsequently make money off of them through fees and other charges. As a population generally new to financial decisions, students are particularly vulnerable to these methods.

A 2008 ConnPIRG Education Fund study found that 25% of students surveyed paid late fees and 15% paid “over the limit” fees on their credit and debit cards. Furthermore, bank overdraft fees cost students one billion dollars each year. More students drop out of college due to financial pressures than due to academic issues, and 67% state that money matters accounted for a lot or some of their daily stress.

This strain does not disappear after graduation. Prospective employers for positions with financial responsibilities frequently check applicants’ credit reports, placing students who graduate with high debt and low credit scores at a disadvantage. Furthermore, students’ credit histories can also impact their ability to rent an apartment, or qualify and get good rates for auto or home loans and insurance.

We testified in support of the Bill today and recomended further reforms to reign in deceptive  and overly agressive marketing practices by financial institutions on campus.

We are also running a peer to peer campus education program  on campus, “Avoid the Debt Trap.” The program is off to a great start and we look forward to educating more students on how to make wise finandial decisions and avoid the debt trap.