One of the most significant financial obstacles that the majority of people encounter on a regular basis is credit card debt. People who use credit cards should ideally have a steady stream of income that ensures they can repay the debt. This isn't always the case, though, as the majority of credit card debtors today are young, unemployed recent grads. This phenomenon is contrary to the recommended method of issuing credit cards, which requires the credit card company to first confirm that the individual being offered the credit card is capable of making the required debt repayments. The impact of credit cards on this population group has been shown to be fatal as young adults have to struggle with paying off massive debts even before they graduate and get employed. The primary objective of this essay is to analyze two books: “Strapped” by Tamara Draut and “Maxed Out” by James Scurlock, and discuss how the issue of credit card debt has affected young adults in the current generation.
How Credit Card Debts Arise Among Young Adults
Credit card debt among young recently graduated adults has been on the rise over the years, with an increase of 47 percent being recorded between 1989 and 2004 (Draut 348). The main reason for this dramatic rise in credit card debt among people under 34 years is due to the ease of acquiring a credit card. For instance, Sean’s mother, Janne, reports that in the past, she and her husband could both work full-time jobs and still not qualify for a credit card (Scurlock 342). Today, credit card companies specifically target students, persuading them to take several credit cards that they do not need. Both Draut and Scurlock note that credit companies usually employ aggressive marketing strategies to reach students including tabling, and direct contact through email and phone. For instance, First USA (now owned by JP Morgan Chase) struck a deal with the University of Tennessee worth $19 million in exchange for the telephone numbers, social security numbers, and addresses of the students and alumni.
In 2000, the same company came up with another aggressive, yet effective, way of selling credit cards to students. The company purchased two high school students, Chris and Luke, who had offered themselves as human billboards to any company that was willing to pay their tuition fees. The two students were considered champions of “financial responsibility”, and were given a lot of publicity, even appearing on several television shows including Fox News, the Today Show, and Good Morning America. However, the same students were unable to complete school and quit their deal with the company. According to Chris, they got into the deal hoping to gain a better understanding of the aspect of financial responsibility but got the feeling that the company was more interested in getting new credit card sign-ups (Scurlock 343). For instance, he notes that in exchange for the $50,000 the company spent on their tuition fees in their freshman year, it received approximately $20 million worth of free publicity and a significant increase in the number of college-age cardholders.
The increased focus by credit companies on students is not unfounded. For instance, Janne notes that these companies do not approach working people as they are aware of the value of the dollar, and may have experience dealing with debt. Students, on the other hand, are a vulnerable consumer group as they are mostly inexperienced in financial responsibility, and do not fully understand the concept of having a credit card. While offering the credit cards, companies rarely inform the students on their obligation to settle the debts and instead offer them more and more credit. The majority of the students end up spending the money on luxury items, without the thought that all this money is borrowed and has to be repaid at an interest. Eventually, the students accumulate so much debt that they spend the rest of their lives working to repay the company. For the company, this is highly profitable, but the student continues to suffer long after they leave school.
Colleges and universities are also to blame for the increasing credit card debts affecting the youth. For instance, Draut gives an example of the University of Tennessee which received $16 million from First USA for exclusive advertising rights within the campus, and many other schools which are paid for every new application filled out by their students (346). However, not all schools allow these companies access to their students on campus, either as an institution policy or state regulation. Although such measures can go a long way in preventing the issue of credit card debt among students, Draut reports that most of these schools are privately owned and charge more than public colleges hence have a constant flow of cash. Additionally, not all states have banned this practice, creating a window of opportunity for companies to exploit students.
Impact of Credit Card Debts on Young Adults and Families
The impact of credit card debts among young adults is significant, sometimes leading to death in extreme cases. First, accumulation of credit card debt is likely to result to several health issues such as depression or high blood pressure among other chronic conditions. When offering the credit cards to students, the companies build high hopes in the students’ minds, while concealing the fact that the credit cards are loans that should be repaid with time. Eventually, the student ends up having several credit card debts in addition to their student loans, which they struggle to pay before or immediately after they graduate, regardless of whether they are employed or not. The frustration that comes with the struggle to settle these debts is usually immense and may lead to depression, disillusionment, and in extreme cases, suicide.
The parents of the students are also affected by the growing credit card debt. Parents usually take the students through college in the hope that the student will learn, graduate, and become independent. However, with the massive credit card debts, most students are unable to attain financial independence after they graduate and end up in their parents’ house. For instance, in the case of Sean, the credit card company issued him with multiple credit cards while he was in school, eventually culminating to a total debt of $12,000. To pay this debt, he had to drop out of school, work two minimum wage jobs, and save money so he could declare bankruptcy. His parents could not afford to pay off his debt and still take his younger brother to college, so Sean decided to take his life as he felt that he had failed himself and his parents. Even after the death of her son, Janne reports that she continually received phone calls from bill collectors, threatening letters, and more offers for credit cards, all of which were stressful and reminded her of her son’s predicament (Scurlock 344).
Overall, credit card companies are responsible for ruining the lives of many young people who have the potential to contribute to the development of society. Even though the parents complain about this issue, rarely do the authorities take action as it is a profitable venture for the learning institution and the credit card company. The companies even influence politicians to prevent them from passing bills that may hinder their access to students. For instance, when Janne and Trisha write to the schools’ administrations demanding the credit card companies to be kicked out of campus, their concerns were ignored. They reported to local newspapers and eventually, with the help of a local congressman, a bill was introduced prohibiting the companies from advertising within the school premises. However, they realized that the politicians were sponsored by the credit card companies and could do little to help the situation.
Conclusion
In summary, credit card companies, school administration, and politicians are primarily responsible for the massive credit card debts facing the youth today. Rather than concentrating on offering students guidance on financial responsibility, the schools collaborate with the credit card companies to put the student in massive debt. Eventually, the students leave college and spend most of their income paying off credit card debts if they are lucky enough not to be overwhelmed and commit suicide. Although the administration and politicians are in a position to stop this trend, little can be done as the credit card companies influence their decisions by offering them money in the form of rewards and campaign sponsorships. However, unless action is taken, the country may end up losing an entire workforce to the credit card companies.
Works Cited
Draut, Tamara. Strapped: Why America's 20 and 30-Somethings Can't Get Ahead. New York: Doubleday, 2005. Print.
Scurlock, James D. Maxed Out: Hard Time, Easy Credit. London: Harper Collins Publishers, 2007. Print.
