H.R. 627 modified the Truth in Lending Act provisions relating to credit cards. This was a vote on an amendment offered to the bill to limit the amount of credit that card issuers could give to college students. It would accomplish this by, among other things, reducing the limit on the credit card of a college student to $500 or 20% of the annual income of the student, whichever is greater.
Rep. Slaughter (D-NY), an author of the amendment, said it was intended “to protect college students from the hardship of excessive credit card debt and bankruptcy.” She cited a figure from Sallie Mae, the largest issuer of student loans, showing “the average undergraduate has $2,200 in credit card debt, and that figure jumps to $5,800 for graduate students, (and) 84 percent of undergraduates have at least one credit card, up from 76 percent in 2004. On average, students have 4.6 credit cards, and half of college students have more than four . . . .” She then noted: “(O)nly 17 percent have said that they regularly pay that debt. . . .”
Slaughter also cited a 2005 study indicating “that many university administrators believe that credit card debt leads to a higher drop-out rate than their academic failure . . . and even more seriously they may be forced to declare bankruptcy and may not have enough credit rating to have credit cards again.” She also argued that, if her amendment were enacted, “the credit card companies (would) take responsibility for their lending practices to reduce the number of young people carrying excessive debt and filing for bankruptcy.”
Rep. Bachus (R-AL), who opposed the amendment, said it could hurt students who actually need a credit card to incur necessary purchases. He also argued that the supporters of the amendment “are really beginning to micromanage.” Rep. Hensarling (R-TX) opposed the amendment because it limited the ability of individuals over 18 to obtain credit cards and said: “(W)e're talking about folks . . . who can vote, who can go to war, in most States can marry, own real property. We shouldn't be paternalistic towards them.”
Rep. Neugebauer (R-TX), another opponent voiced his concern that the amendment reflected “a road we seem to be going down every day in these first hundred days (of the Obama Administration), and that is the Federal Government telling people what they can and cannot do. . . .”
The amendment was approved by a vote of 276-154. Two hundred and thirty Democrats and forty-six Republicans voted ‘aye”. One hundred and twenty-nine Republicans and twenty-five Democrats voted “nay”. As a result, the House added language which restricted the amount that could be offered on credit cards to college students.