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King Kong debt meets middle-class life

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"I don't think students are more in trouble than [other] Americans in terms of overspending - they're just ... the least experienced," says Darryl Dahlheimer of Lutheran Social Service Financial Counseling, the group hired by the Twin Cities campus. "We work with a ton of bitter 30-year-olds who have paid for a decade on a card they got in college ... so we figured: 'Why not go upstream?' "

It is the only such service on a college campus as far as Mr. Dahlheimer knows. So far, about 25 percent of his student clients have needed credit consolidation. It typically takes four or five years for them to pay off their debts.

Debt is an "epidemic," Dahlheimer says, and he considers his work a "thimbleful of help" in the face of a credit-card industry that actively targets young people. He recalls one student who signed up for two cards in a week just because the vendors were offering free cookies.

Industry representatives counter that college students' debt problems are overblown. They have an average credit limit of just $1,395, says Daniel Drummond, spokesman for Your Credit Card Companies, an educational campaign set up by a group of major financial-services firms. He cites a 2002 study by the Credit Research Center at Georgetown University, which found that college students are more likely than others to pay their balance in full; only 5 percent incurred more than $26 in finance charges in a given month.

Yet consumer advocates say it's getting harder for people to keep up with potential pitfalls in the fine print. Cards with low interest rates, for instance, often raise the rate substantially if the cardholder makes one late payment.

Those who get by just paying the minimum monthly charge may not have noticed that the typical minimum has been lowered in recent years from 5 percent to just 2 or 3 percent, according to De-mos, a research and advocacy group in New York. With an interest rate of 15 percent, it calculates that it would take 32 years to pay off $5,000 by making only 2 percent minimum payments. It also warns about bigger late fees: Revenue to credit-card companies from late fees jumped from $1.7 billion in 1996 to $7.3 billion in 2001.

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