More than one-third of students had credit cards before they entered college, and another 46 percent acquired them during the first year. Except for charges for tuition and fees, their spending patterns resembled those of nonstudents. We did not find a uniform response to the controversial issue of on- campus credit card marketing among the universities we visited. In response to complaints about aggressive marketing techniques, a few universities had adopted policies restricting credit card solicitation on campus. The credit card issuers that responded to our inquiries participated actively in the student market, but again they did not have a uniform set of policies or practices. Credit cards offer clear advantages to college students because they provide an interest free loan for students until the payment is due and a convenient noncash payment option for both routine transactions and emergencies. If used responsibly, credit cards allow students to build up credit histories that will facilitate increased access to credit in the future. However, if college students have not learned financial management skills in their secondary education or from their parents and misuse their credit cards or mismanage their credit card debt, the disadvantages can outweigh the advantages.
Why GAO Did This Study

Credit cards offer clear advantages to college students because they provide an interest free loan until the payment is due and a convenient noncash payment option for both routine transactions and emergencies. If used responsibly, credit cards allow students to build up credit histories that will increase their access to credit in the future. However, if college students have not learned sound financial management skills in high school or from their parents, the disadvantages of credit cards can outweigh the advantages.

What GAO Found

GAO found that more than one-third of students had credit cards before they entered college, and another 46 percent acquired them during the first year. Except for charges for tuition and fees, their spending patterns resembled those of nonstudents. GAO did not find a uniform response to the controversial issue of on-campus credit card marketing among the universities GAO visited. In response to complaints about aggressive marketing techniques, a few universities have restricted credit card solicitation on campus. The credit card issuers that responded to GAO's inquiries participated actively in the student market, but they did not have a uniform set of policies or practices.