The New York Times recent “Debt Trap” series included some alarming statistics:
- The average American household has $8,565 in credit card debt spread out over 13 cards.
- The average college student graduates with $20,000 in debt, including $2,623 in credit card debt.
Schools and universities need to address the problem of American indebtedness by teaching students basic financial concepts, including business math, balancing a checkbook, opening a savings account, avoiding credit card debt, and investing in the stock market.
A call for education, of course, shouldn’t minimize the need for more regulation. Banks shouldn’t be permitted to sign up consumers for mortgages that they can’t afford; credit card companies shouldn’t be allowed to charge $35 late fees; and universities shouldn’t be complicit in hawking credit card offers to students.
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It's more complicated than consumers simply not understanding basic finances. To avoid being taken advantage of, they would have to learn how to read and understand the contracts they sign. Most borrowers do not realize that some of the legal clauses that lenders have included in credit card agreements and promissory notes have eliminated many basic rights that they take for granted.
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