Final answer:
Credit card companies market to college students understanding that they need financial resources to cover their educational expenses. Students are viewed as potential customers who will eventually repay their debts when they enter the workforce. The quantity demanded of financial capital by students is based on confidence in their future income which increases their borrowing while studying.
Step-by-step explanation:
Contrary to the statement that credit card companies do not market to college students because of their lack of income, these businesses often target students because they understand the need for financial resources to cover educational expenses. College students frequently require funds to pay for tuition, books, and living expenses, which can lead them to seek credit options. Despite typically having lower or non-existent income while studying, students are anticipated to secure employment after graduation, which makes them potential customers for credit card companies willing to take on the risk in the present.
It is important to note that college graduates often begin their careers in debt, which can include credit card debt. The availability of credit cards and student loans provides a means for students to manage immediate financial demands with the expectation that they will repay these debts in the future when they are better able to. The banks and financial institutions are aware of this and, encouraged by low interest rates and the prospect of future repayment, extend credit offers with rates that can range from 17-20%.
Therefore, the demand for financial capital from college students represents an understanding that they are investing in their education, which is expected to pay off in the form of higher earning potential after graduation. This confidence in future income increases the quantity demanded of financial capital, as students look ahead to repaying their debts once they have established careers.