8A -Monday, September 21, 2009 The Michigan Daily - michigandaily.com New rules change how banks market on campus From Page 1A 73,000 alumni accounts open and 1,500 student accounts open, according to Sigler. So long as the 10-year contract remains in place, the revenue from these accounts will remain constant. The legisla- tion could affect the terms of a pos- sible future contract, though. Christine Lindstrom, director of the Higher Education Project on debt conducted by the United States Public Interest Research Groups, said there are two key pro- visions within the CARD Act that will protect students as consum- ers. The first condition Lindstrom highlighted is the issue of tabling and handing out giveaways in exchange for opening a credit account, which will no longer be permitted on campuses after this legislation comes into affect. Lind- strom said that without giveaways, students will be more focused on the terms and conditions of the credit agreements they're signing. The secoid condition is that students under the age of 21 must have a cosigner or be approved via a financial background check prior to being approved for a credit card. Lindstrom said the need for students to show income or assets before being able to obtain a credit card without a cosigner is also a major component to the new legis- lation that will enable students to be educated consumers. "Previous to this point, students in college were the only consumers who weren't held to a standard of what your income and your assets are," Lindstrom said. "And based on your income and your assets, we will then give you an interest rate and a credit line, and that basically is the way it works for every adult in society except for students." Another important component of the legislation that will help lower student credit card debt is the opportunity to lower penalty interest rates over time, Lind- strom said. "That's huge andverysignificant in terms of decreasing debt because that's not the case now," Lindstrom said. "By giving the cardholder some ability to proactively fix the problems that they had, to get out from underneath the penalty inter- est rate, you can lower the debtthat that person would otherwise face." Lindstrom said she sees the necessity of a cosigner as essential in protecting students from debt they would otherwise be suscep- tible to acquiring if there were no background checks on assets. "If you're qualifying for credit that you can't afford, of course you're plunging yourself into deep- er debt than you otherwise should be in," Lindstrom said. In U.S. PIRG's Campus Credit Card Trap Study, conducted from October 2007 to February 2008, 66 percent of students had at least one credit card. Out of that number, 30 percenthad a cosigner or their par- ents paid their credit card bill. For those students who paid their own credit card bills, 36 percent paid their bills in full each month, while 34 percent carried a balance. Peter Garuccio, senior director of public relations for the American Bankers Association, said the pro- visions of the CARD Act are going to drastically change the nature of the credit card industry. "Really when you look at all of the provisions en masse, in all, it really requires a new business model," Garuccio said. "They've got to change their operations, they've got to change their market- ing, they've got to change their risk assessment, they've got to change their pricing. They have to change everything really." But he added that the effect the legislation will have on stu- dents opening credit accounts remains unclear because the Fed- eral Reserve hasn't yet established well-defined guidelines of how to determine if a student has suf- ficient income or assets to qualify for a credit card. Garuccio said the association is awaiting a preliminary rule on those guidelines by the end of the month and a final rule that will be adopted by the end of the year. "Until we know what that looks like, we don't know what the full effect is going to be," he said. "But again, suffice to say it's going to be tougher for people in this age group to geta card." Garuccio said he thinks banks and universities will still partner up through affinity agreements - like the one between the Uni- versity's Alumni Association and Bank of America - in the future to create programs that are mutually beneficial to each party. But he said not many students actually open credit accounts through campus displays because programs are geared toward alum- ni - as is the case with the one at the University. Some students said they think the new legislation requiring those under 21 years old to have a cosigner to open a credit account will protect students from piling up debt and from overcharging on items they can't afford. LSA sophomore Paige Tibbits said she is waiting to get a credit card until she is older because she doesn't want to rely on it to make payments. "I kind of agree with that because if you don't have any source of income or any way to pay offa credit card, you could put yourselfinaserious financial situa- tion that could potentially damage your future," she said. "It makes sense that if you don't have a reli- able source of income, why should you have a credit card?" But some students, like LSA junior Rachel Rickard,think people under 21 years old should be able to open their own credit accounts without a cosigner. "To me that seems kind of ridic- ulous because I don't have a job during the school year; I only have a job during the summer," Rickard said. "And I have a credit card and I can pay it off." Rickard said she uses her cred- it card for certain educational expenses, like textbooks, in order to build up her credit history. "BasicallyIuseitsoIhave estab- lished credit now, and I never pay for anything with it that I know that I don't have the funds to pay back," she said. Sweatshop Labor & Codes of Conduct: from Form to Function Wednesday September 23, 7:00-9:00pm Gallery, Hatcher Graduate Library, Rm. 100 Reception to follow Panelists: S#, CEO, Knights Apparel 4 liz t s. e~edy, Vice President, Corporate Responsibility, Collegiate Licensing Company >, President, J. America . Is there an ethical imperative to effectively implement codes of conduct? . If so, what are the strategies and pitfalls of implementation? Join us for this discussion on issues of aspirational versus operational codes and on the responsibilitiesof companies versus Universities in assuring that codes are implemented. Co-sponsors: UM CENTER FOR ETHicS IN PUec LIFE THE UM PRESIDENT'S AVscRY COMMITTEE ON LABOR STANDARDS AND HUMAN RIGHTS FOLLOW THE DAILY ON TWITTER @michigandaily @michdailynews @michdailysports 4 het1ihinanaibi PRESENTS I I SICK OF THE DORMS? CAN'T FIND A PLACE TO LIVE? Visit michigandaily.com/classifieds to see all of the great houses and apartments Ann Arbor has to offer on a convenient map! Also be sure to check out the Classified Pages for other great properties.