It's back to school time, and the return to school brings with it books, school supplies, lunch boxes and football games. Increasingly for college students, and even in some cases for high school students, not yet of legal age, it brings on credit decisions. Recent years have witnessed credit card issuers deluging college campuses with credit card applications. Combine that with the number of parents who are not even aware that their children have credit cards----until a debt collector calls about an overdue bill and you have the ingredients for major problems.

    Parents often provide students with credit cards to handle emergency or even ordinary expenses and students often seek to have relatives or friends with established credit to cosign credit obligations so that they can make purchases like automobiles. But students sometimes enter into credit transactions thinking that they will be able to get jobs to pay the obligations, only to find the job falls through or the academic demands are to great to allow for significant job opportunities.

    While much of our economy is made up of consumer debt of one sort or another, for credit to be a good thing, it must be granted to persons who have the ability and willingness to repay the obligation. As with any other activity, when credit is taken up by persons who have little experience with it, it can lead to trouble. Students with little income and little experience in financial affairs can find themselves with a large debt burden. Using a credit card may not feel like using cash. It is not. It is spending cash plus the debt service to be paid on it for every month in which the account is not paid in full. This tends to be anywhere from 12% to 24% per year expressed as an annual percentage rate or APR. Putting off payment only makes the debt get bigger.

    What will happen to those students who fail to pay? Any number of things. They can be sued on the debt. The credit card company may hire a collection agency to hassle the students for the payment. They will most likely report the student's payment habits to the credit bureau, reducing the student's ability to receive credit in the future or increasing card costs or both. These records will stay on file for seven years, or in case of bankruptcies or judgments, as many as ten years. Even if the student does not need new credit cards, he or she may graduate and find that prospective employers have pulled their credit file and will turn them down for a job because of the debt problems.

    Once you are in debt, every payment you make or fail to make is a "footprint in the sands of time" that can be used by other creditors, insurers and employers. Whether new credit is a useful tool or a trap depends entirely on how it is used. My office has produced a series of taped programs, CREDIT:LIFE OR DEBT to help young people understand credit and use it wisely. For a free brochure on CREDIT CARDS AND YOUNG ADULTS contact the Department.