Credit card reform swipes easy plastic from college students

— -- Back when dinosaurs roamed the Earth, you actually had to have a job to get a credit card.

All that changed in recent years, when credit card companies determined that issuing credit cards to college students was a great way to nurture long-term brand loyalty. Many resorted to aggressive marketing tactics, offering everything from T-shirts to iPods to students who signed up.

Not surprisingly, some students ran up charges they couldn't repay, triggering interest rate increases and late fees. Because credit was so easy to get, "A lot of kids got themselves in trouble," says Adam Levin, founder of Credit.com, a consumer website.

Soon, though, credit won't be so easy to get. Last week, President Obama signed legislation that restricts a number of controversial credit card practices, including issuing credit cards to college students. The law prohibits lenders from issuing credit cards to individuals younger than 21 unless they can prove they can make payments or get a parent or guardian to co-sign.

Because most college students don't have much money, the upshot is that most won't be able to get a credit card without permission from their parents. The bill also requires lenders to get permission from the co-signer before increasing the card's credit limit.

Students who fall behind on their credit card bills often leave college with blemished credit reports, which makes it more difficult for them to rent an apartment, get a car loan or even find a job.

"This is a mess that stays with you for a long time," Levin says. "As much as students are obsessed with GPAs, your credit score is the most important number you're going to have to deal with" after graduation, he says.

Eighty-four percent of undergraduates had a credit card last year, according to a study by student lender Sallie Mae. The average senior graduated with a balance of more than $4,100, up from about $2,900 in 2004.

Even more troubling, only 17% of students surveyed said they regularly paid off their monthly balances, and 60% said they were surprised at the size of their balances.