You've Got To Be Kidding Me!

I was about to settle in for a nice, peaceful Memorial Day and made the mistake of going on-line first.  I came across the following piece from The Atlantic's website.  I hope the author meant this to be tongue-in-cheek, but I don't think so.  I'll let you read it for yourself to judge, but I for one am flabbergasted by the logic here.

So, just because our 18-year-old students are old enough to serve in the military, that means we should blindly allow them to be potentially taken advantage of by credit card companies and allow them to dig themselves deep into debt.  We should allow them to obtain credit on their own, even if they have no steady source of income by which to pay off this debt.

Isn't it bad enough that we are already a country of compulsively debt-ridden people?  Isn't it bad enough that many people out there - including the government - is trying to live a lifestyle they desire as opposed to one they can afford?  Do we really want to strap our next generations with more of the same?  When do we finally break this self-defeating cycle?

Listen, I'm not opposed to student loans as part of a plan to reasonably pay for the cost of college.  And I'm not even opposed to using a credit card as a matter of convenience to buy books and the like, provided the bill is paid in full each month.  Better yet, use a debit card so that they can't go beyond their means.

But to put students into a position to dig themselves deep into debt, just because they are of legal age is absurd!

Here's the piece.  You be the judge.  Now I'm going back to my peaceful Memorial Day.

May 23 2009, 2:17 pm by Conor Clarke

Let College Students Get Into Debt

Most of the provisions in the new credit card bill are unobjectionable. Indeed, most of the provisions in the new credit card bill are unobjectionable and slightly redundant, since they would have become law anyway as new Federal Reserve Board credit rules a year from now. (Before that happened, Congress just wanted to get some credit of its own.)

But there is one feature of the new bill that I do find odd: It restricts people under the age of 21 from getting a credit card unless they have a co-signer or an independent source of income that they can use to pay off their balance. But why on earth don't we want college students to take on debt?

Part of the issue here is good old horizontal fairness. What, so our country's 18-year-olds can fight and die and vote, but can't even declare personal bankruptcy or default on a subprime mortgage? I am all for society drawing semi-arbitrary lines between adults and kids -- that's just an intractable problem for a democracy. But we can at least do it consistently.

The second problem is more specific: if the the point of credit-based consumption is to bring lifetime consumption more in line with lifetime income -- as I believe it is -- then college students more than anyone else should be getting into debt. They have the largest gap between between desired present consumption and expected future income. That is a gap society can and should try to regulate, but it also one society should try to close.

More to the point, college students actually seem to use credit cards for educationally useful things like textbooks and tuition.