New credit card regulation adds protection for students

The Credit Card Accountability, Responsibility and Disclosure Act of 2009 takes effect today.

The law, which President Barack Obama signed in May, provides protections for students and imposes requirements on colleges and alumni groups that offer credit cards, according to Inside Higher Ed.

Alongside a ban on retroactive rate increases and new rules governing timelines for implementing increases and late fees, the law features several campus-based protections.

The law prohibits companies from giving credit to customers under 21 years old unless they have a co-signer or have provided evidence they can pay their bills. Companies cannot offer tangible incentives to students at campus events under the new law and companies must disclose “college credit card arrangements” to the Federal Reserve Board, Inside Higher Ed reported.

Colleges and universities are also subject to several regulations under the law. They cannot knowingly allow credit card companies to offer tangible incentives to students. The law also requires that “an institution of higher education shall publicly disclose any contract or other agreement made with a card issuer or creditor for the purpose of marketing a credit card,” according to the National Association of College and University Business Officers.

The new law also suggests that colleges provide students with education and counseling about credit cards and debt, according to Inside Higher Ed. The law recommends these courses be part of orientation programs for students.

—from staff reports