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That's the kind of extra credit that prepares them to be subprime borrowers for the rest of their lives.
thank you, your pun goes very well with my coffee.
anyway, i thought the young people were using debit cards nowadays...
These card issuers love it. Get a generation of future earners started off with dinged credit so they can keep them on the higher rate treadmill for eternity.
These kids can then graduate to subprime option ARMs and look forward to a future of trying to dig out from under "the man."
OT: CRE loans tighten up
Forbes.com File Not Found
"Six months ago, it was money chasing deals. Now it's deals chasing money," said Larry Volger, president of Prime Group Inc., a Chicago-based commercial real estate developer.
[...]
Commercial real-estate developers are having to provide about 25 percent of equity financing, up substantially from the 10 percent to 15 percent permitted before a severe credit crunch compelled lenders to adopt a more conservative posture a few months ago.
Here's a great quote:
The tighter standards mark a departure from the loans that were offered from mid-2006 to mid-2007, when Wall Street banks were underwriting interest-free loans and debt based on future revenue, not current cash flow.
I think it's interest-ONLY loans (reading the next paragraph)....
So, more down payment, higher standards and principle must be paid! Where have we seen this before....
This is a form of debt slavery. In the early '90s, when i was in school, was when this practice began to flower.
Fortunately, I didn't get a credit card until after I graduated, or I'd still be paying for it today.
They have already been convinced by the sales... er... admissions department to finance what is largely a vocational certificate for $100,000. What's another $10,000 on credit cards?
Critical thinking is dead and the magazines are reporting what the best party schools are. I work on a campus (a "selective" [these says, desperate- bring money, you're in!] at that), and every day I see life imitating the Mike Judge movie Idiocracy more and more.
My daughter is a UVA graduate. At the beginning of her first year major credit card companys set up tables on the lawn and gave free gifts to students who applied for cards. No permission from parents required. The university however did require the students written permission in order for the parents to receive a copy of their childs grades.
I work at Cornell and I see this stuff all the time. It is amazing the number of offers that students get in the mail. At least 3 a week.
Ironically, there is a class of student that wants to get these offers: foreign students. Banking is a real headache for many of these students, and a credit card would make life a lot easier for them. However, it seems that these credit card places are not completely crazy. Every foreign student in my department that has applied for one of these things was turned down.
This is an old story, covered in sad detail in the documentary "Maxed Out." It's another credit scam volcano waiting to blow.
A lot of these credit card debts will turn bad about 2-3 years after students finish college. It will add fuel to the next recession.
Got to get those crack addicts hooked while they're young.
Moreover, its important to get as many students to carry a monthly credit card balance as possible, so you can get the peer pressure to encourage students to spend what they do not have. Make it so that, if you don't have a balance, you're just weird.
I am an Alumni of Subprime U and I graduated with honors. I remember my first card, a shiny piece of plastic and away from my parents, I was on top of the world. I was pretty good for the first semester, then unexpected expenses came up like tuition, pizza, and beer. Eighteen and fearless I took on more cards, as I was making minimum payments, the credit card companies kept increasing my credit limit. I think in total I had four cards with limits of $2000. Not bad for a student earning zero dollars a year.
Like a drug addict, I had no one to blame but myself, but that doesn't mean the drug peddlers shouldn't be held accountable too. By the time I graduated, I had over six thousand in credit card debt. It took me two years to pay it off, but since then (10 years), I've been 100% debt free (except for a small car loan). So I did learn a valuable lesson, but many aren't so lucky. They are put into a bad position from early on and it takes a great deal of effort to get out. People need to accept responsibility, but so do the corporations.
You might even argue that lending at a fairly high rate to somebody whose primary source of income is a student loan is by its very nature predation.
Put another way, if I weren't working and were living off of meagre savings, most sane credit card companies would turn me down in a heartbeat.
Yesterday my wife received a CapitalOne "No Hassle" [sic] credit card. She just had to call to activate it.
However, she didn't want it -- didn't remember asking for it -- didn't remember having an account there.
So she called to cancel her account.
After 45 minutes, 5 transfers to 6 people, and multiple decibel increases, she finally got to someone who would agree to cancel her account and fax her a confirmation in 7 to 10 business days.
Hotel California redux.
Best regards,
Needs a "Feeding On Our Young" label.
rgds
It takes two to rack up CC debt. The enabler and willing. Just another bit of evidence that illustrates the perception of credit going from emergency cushion of last resort to the norm.
Back in the Dark Ages, after I got kicked out of a Community College, it took me a lot of hoop jumpin' to get my first plastic. It was an unsecured $500 limit, and useful only for reservations. But I paid the balance off almost every month (crikey, it was only a half-grand limit...), and soon every other bank was courting me with offers.
I took a lot of them up on it--eventually having eight of them I could use, with aggregate credit limits in the hundreds of thousands (after a few years of good history). My father advised me that this would hurt my FICO, but boy was he wrong.
For a good FICO, it pays to have a bunch of cards that don't get used as long-term loans, at least in my case.
I am pretty certain that had they been offering me a card while I was flunking out of college, I might not have had the spending control I possess today. I wonder if the banks take GPA into account while pushing their product?
My opinion is that, once my generation and, even more so, the generation after me, achieve political power, this is going to become a serious crisis. We have been accosted with credit cards, asked to pay outrageous prices for higher education (almost always with debt), asked to pay outrageous prices for homes during prime household formation years, asked to pay for the boomers meds and we won't see a dime of the Social Security we pay in.
Is there a word for something that is not actively intentional, but that someone or something kind of slides into without realizing it? I think that word aptly describes the baby boom generations war on their children.
Cheers,
prat
Prat, I think you're looking for the phrase "road to hell is paved with good intentions."
Clytemnestra's Sister: Close, but not really. I'm looking for something implying more absent-mindedness and a more neutral motivations.
It would be a word that describes a man who slowly slides into corruption via baby steps, without even realizing it. First he carries a pen home from work without realizing it. Then he grabs a small box of markers for his kids who need them for school on the way out. Next his friend insists that he take some payment for the computer memory he brought home. Eventually he finds himself stealing from his company wholesale without quite realizing how he got there.
Anyway, something akin to that is how I think that our current 30-and-younger crisis arose.
Cheers,
prat
"Like a drug addict, I had no one to blame but myself, but that doesn't mean the drug peddlers shouldn't be held accountable too."
As I've said again and again -- society doesn't give any counter-messages to spending and credit. Or if it does, they're nowhere near as well-funded.
People do what looks easy, if everybody else is doing it. Massive ad campaigns make it look like "everybody else is doing it."
I'm not excluding the individual's responsibility, but the irresponsible peddling of credit is nothing less than the subversion of society, with the tactit approval of our society's leaders.
prat-
Maybe you are looking for "criminal negligence."
Or "wilful ignorance."
And don't draw your age line at 30!
Those of us in late 30s/early 40s (Will the real Gen X please stand up?) began complaining about the baby boom predation in the late 80s/early 90s. We are not your parents or grandparents, we are your big brothers and sisters, and we have been waiting for you guys!
Help us help you!
Praetorian,
The theft analogy really isnt appropriate. Boomers (including me) have spent their lives in a bubble of nearly seamless prosperity. The one rough patch we had seventies was subsequently revised into an object lesson demonstrating why any downturn should be seen as a buying opportunity. We believe things will work out fine for the younger generation because so far things have worked out fine for us. The fact that this may be a deeply flawed assumption is now becoming apparent to more and more of our children:
The Narrow Bridge
Hmm.. Prat, you could try negligent.
Negligence - Wikipedia, the free encyclopedia
and we won't see a dime of the Social Security we pay in.
The system as structured now will still pay out the majority of claims after surplus contributions (1983 -> ~2010) have been spent, but with moderate tweaks like raising the cap to $150K or so this surplus will remain eternal.
began complaining about the baby boom predation
Gen X is either earning now or eventually inheriting 100% of the baby boomer capitalization. Gen X will have its time in the sun.
I do agree about the Idiocracy comment above.
About half this country are idiots of one stripe or another.
Amen, threetorches.. I'm probably just a bitter Gen-Xer, but what other generation saw the advent of latch-key kids and the divorce boom?
There was an interesting article (was it in Time Mag./U.S. News or elsewhere?) I once read that claimed there was a repeating cycle of generations with similar characteristics and that the Gen-X/Y generations were the clean-up crew, explaining this as to why many were cranky and/or slackers; they know they are. I'll have to see if I can find it. Anyways I think the cycle was builders, bohemian generation (e.g., boomers/F.Scott Fitzgerald's 1910-1920's), clean-up and new(?).
Sociological reverse evolution. It's what happens when scarcity arises.
Prat - I thought that was "slippery slope"
The Scarcity is a result of people choosing to be more consumer, than producer or contributor.
Nothing new here... they pushed those things way back in the late '60s, early 70's when I was in college. A credit card is a huge convenience; misuse is a personal choice.
Errm.. Troy, what surplus? Soc. Security is a pay as you go system. Besides, where do you think a large part of what the gov't has been borrowing came from? The Soc. Security Trust Fund. You guys spent it.
Besides, as dryfly has said, the money of any country (particularly in fiat paper) is only worth what the country can produce in goods and services. The GDP is what counts and is what will be paying for the Boomer Soc. Security.
You have a point, the Boomers will be leaving a bunch of capitalization. However, they are also leaving a bunch of national debt and much of the capitalization is gonna be burned within a few years once Boomers start retiring in earnest.
As I've said again and again -- society doesn't give any counter-messages to spending and credit. Or if it does, they're nowhere near as well-funded. We're the targets of one of the most pervasive propaganda efforts that the world has ever seen. The central message: buying stuff will make you happy.
Nothing new here... they pushed those things way back in the late '60s, early 70's when I was in college.
Um -- I don't think so. When I applied for an Amex card in 1970 as a fully employed 21-year-old, an acceptable application from someone my age was considered so unlikely that no card was issued until Amex had a discussion appropriateness of my having a card with a business affairs officer at CBS (where I was then working). Were standards different then? You better believe it.
I see it as rational. Students load up on credit cards, buy stuff, and then stiff the credit card company. They have sold off the stuff to banks and IBs, etc., and then the banks, etc take the hit and the shareholders pay. Way to make the rich help the poor. Right?
"asked to pay outrageous prices for higher education (almost always with debt)"
The price of a thing increases in lockstep with the zero-default-risk credit extended for its purchase.
If people graduated from college with no school loans, marketing credit cards to them while they were in school makes perfect sense. You are both betting on your future earning potential.
The problem is that many people get degrees in subjects that will not land them very high paying jobs, and yet they still have the same school debt load as someone who has a more valuable degree.
Someone who majored in ancient history ,or whatever, with 20k+ in school load debt is going to have a tiny amount of disposable income for years to come.
So who is worse? The credit card company that gives a few $k in debt at a high interest that went to actual goods and services, or the university that gives 10s of $k in debt for a dubious skill?
The combination of the two is of course extra painful.
Does anyone know of any public statistic of average time taken to pay off school loans broken down down by degree?
I also went to college in the early-mid 1990s, when credit cards for 17 year-olds became truly vogue.
It was a great lesson. Within a year I had a $500 bill (textbooks for that quarter) I couldn't pay when my work-study job got canned in a department budget cut and I had no car to get to any other job that would have helped. I ignored the bills for a couple of months - good thing I couldn't afford a phone either - before prevailing on an unhappy relative to help me with the bill (my mother at the time being unconscious and unemployed after a car accident).
Lesson learned and I refused to have anything to do with credit cards for the next 17 years. Probably not the lesson the credit card industry hoped that I would learn, but oh well.
Just sounds like more people being irresponsible. I got in a competition with a friend of mine in college to see who could get the most credit cards...needless to say, I won. I think I had 6 or 8. Still have most or all of them, with available credit of up to $40,000 on some. Credit score 800. My credit card balance is the last months expenditures until the due date and paid off. All earning me miles and downloading into Microsoft Money where I can track my expenditures. Being responsible with credit cards has nothing to do with the banks making them available, and everything to do with how children are raised.
Jtd-
Don't knock ancient history- I studied it in college (and borrowed to do so) and now I'm a bankruptcy attorney- go figure.
History helps us put the present into perspective- so that we don't fall for all those "this time is different" arguments.