Big threat on campus: credit cards
CLEVELAND, OHIO — I spent two days recently wishing I could go back to college instead of pay for it. My son Zack and I were on the campus of the University of Cincinnati, where he starts his freshman year in the fall. It was orientation. He was being oriented to Life In College. I, to Life Without Money.
At this point, I offer you, the reader, two promises. First, I will not tell you about how different things were when I went to college, about how all I had was a hot pot to boil the labels off cans of Spaghetti-O's and how the cafeteria served only gruel. Second, I will not complain about my impending poverty and the high cost of higher education. No, this is a happy tale of how I pronounced what may be perhaps my last parental proclamation.
During the orientation, we saw a play about the social and emotional aspects of student life. We watched kids grappling with alcohol and drugs, sexuality, depression, stereotypes, cults, and failing grades. It was an exquisite catalog of parental fear. But my biggest worry was not on display.
Later, I told Zack that there was only one thing he could do while in college that would cause me to categorically cut him off financially without any discussion.
"Drugs?" he asked.
"If I get someone pregnant?"
The correct answer is credit cards. I told him that if he ever signed up for a credit card, I'd immediately stop paying for college. He seemed surprised. At least I had gotten his attention. I explained that the most dangerous people he would meet on campus the first few weeks of school were not zealous cult leaders, drug dealers, or thieves but the preppy bank employees offering credit cards to kids without jobs who were away from home for the first time. These are the same people who call each night at dinner offering me enough credit to charge five college educations.
I compared for him the rates on the college loans we were about to take out and credit cards. The college loans are at 4 percent, and you don't have to start paying them off until six months after you graduate. Credit card rates can be 21 percent or higher and you start paying in 30 days.
I told him how the bank makes the minimum payment so low that most people never pay the debt back - they just keep paying off the interest until they max out the card and get another one. By some counts, American households have an average credit-card debt of $8,500. That doesn't include other debt such as mortgages, car loans, or student loans. If you make a minimum payment of, say, $150 each month on an $8,500 balance at 21 percent interest, it will take 258 months, or 21 years, to pay back - and you will have paid more than $38,000.
So where, my dear Zack, does all that debt lead? That's right, to bankruptcy, personal ruin, and despair. In fact, the rate for personal bankruptcy has doubled in the past 10 years. (Statistics on despair aren't available).
Twenty-five years ago, my parents told me pot would lead to heroin. Here I am telling my son that a single credit card leads to bankruptcy. Was he as skeptical as I was? Who knows, but he seemed extremely relieved not to be talking about drugs, alcohol, or sex.
At orientation, I learned about my son's privacy rights: How I can't find out his grades or why he went to the college infirmary unless he grants consent. But I know his social security number, his address, and his mother's maiden name. And you can be sure I'll be checking his credit report.
• Jim Sollisch is creative director for an advertising agency in Cleveland. His essays appear in newspapers across the country.