The Senate passed the Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act of 2009), H.R. 627/S. 414 on May 19, 2009, and the House passed it on May 20, 2009. The President is expected to sign this act into law.  This message summarizes the provisions relating to college students.

Title III of the act, sections 301 to 305, affect college students.

Section 301 bans the issuance of a credit card or open-ended consumer credit plans to consumers under age 21 unless:

1.   A cosigner age 21 years old or older has agreed to be jointly responsible for the account. The cosigner must have the means to repay the debt.

OR

2.   The borrower demonstrates independent means of repaying any debt incurred through use of the credit card. The regulations will include safe harbors with regard to this option.

Section 303 requires written cosigner approval of any increase in the credit limit on a credit card held by a consumer under age 21.

Section 304 requires public disclosure of contracts between colleges and credit card issuers and prohibits giving away tangible items as inducements to encourage college students to sign up for credit cards (but only if the give-away occurs on or near a college campus or at an event sponsors or related to a college). It also includes a sense of Congress statement encouraging colleges to adopt policies that limit the locations where credit cards can be marketed and which provide credit card and debt counseling and education as part of new student orientation programs.

Section 305 requires an annual report by creditors concerning any business, marketing, promotional agreements or affinity card agreements with colleges or college alumni associations. The report will include copies of the agreements, the amount of any payments to the college or alumni association, and the number of new accounts and the total number of accounts subject to the agreement. The information will be aggregated by college and affiliated organizations. This report will be submitted to the Board of Governors of the Federal Reserve System. The Comptroller General of the United States will also use this information to evaluate the impact on credit card debt and periodically issue a report to Congress.

We hope this information is a valuable resource for you, as many of you prepare for your children to head off to college.