In this April 26, 2009 file photo, credit card signs are posted outside a New York parking garage. A law hailed as the most sweeping piece of consumer legislation in decades has helped make it more difficult for millions of Americans to get credit, and made that credit more expensive.

NEW YORK - Choosing what kind of plastic a college-bound student should carry may seem like an easy decision to make after all the work it takes to pick a school. But a new law making it harder for students to get their own credit cards means most parents now have to choose whether to help their kids get one, or send them off with less flexible choices like debit or prepaid cards.

The right choice could help a graduate enter the working world with a strong understanding of how credit works and a solid credit rating. The wrong choice could be costly, not only in terms of how much debt gets charged up, but also in the potential damage to the credit histories of both parents and student.

One part of the new credit card law says applicants under 21 must prove they can pay the bill, or have a co-signer to open an account. But most parents want their kids to have some card available, at least for emergencies.

That leaves parents to debate whether they should co-sign, or get their child a card linked to their own account? They might also ask if a debit card or prepaid card would suffice?

The answers depend upon several factors, including the student's spending habits, whether they have any income, and the strength of the parent's own credit history.

"This whole situation with college students and credit is starting to turn into a thorny issue," said Bruce McClary of Clearpoint Credit Counseling Solutions. "A parent really has to gauge their comfort level, in how they observe their child as someone who manages money responsibly."

College campuses were targeted as a prime market by credit card companies in recent decades. They dangled freebies like T-shirts and pizza in exchange for filling out applications, and consequently undergraduates developed a serious credit habit.

In the 2008 spring semester, 84 percent of undergraduates carried at least one credit card, up from 76 percent in 2004, according to the most recent data from student loan provider Sallie Mae. What's more, the study found half of college students had four or more cards, and seniors graduated with average card debt of $4,100, up from $2,900 in 2004.

Even as parents want to help their kids avoid graduating with a boatload of debt, they also know the importance of a credit history for their future.

Atlanta residents Kimberly and Mark DeMeza had an eye toward helping their oldest son, Kevin, establish a credit history when they made him an authorized user on her Visa account three years ago. That also made it easier to track his spending at the University of Florida.

"I also thought that it would help him get used to having a credit card," Kimberly said.

The DeMezas have benefited from the fact that Kevin isn't often tempted to spend. "I don't really have that much to buy," he said.

But for students more inclined to shop, access to the credit limit on a parent's card could result in some unpleasant surprises when statements arrive.

Kevin, now 21, had opportunities to open his own accounts, but he didn't submit the applications stuffed into his bag at the bookstore or displayed at the student union. "I don't have any income, so I'd better not," said the biology major. Having a card no one else kept tabs on would also provide temptation to overspend, he added.

The experience has been positive enough that when Kevin's brother, Brian, heads to college this fall, it will likely be with a similar arrangement.

As their mother hoped, being authorized users will help her sons establish credit histories, said Fair Isaac Corp. spokesman Craig Watts. Fair Isaac, which tracks consumer credit and gives borrowers a "FICO score," no longer weighs an authorized user as heavily as it does having one's own card because of past fraud. But Watts said, "Both kinds of credit can be used to establish a strong credit history and a good score."

One worry Kimberly DeMeza still has is whether this system really teaches her sons how credit works. "The bill still comes to me," she noted.

"There really is not a lot of good personal finance education done for these kids," she added. She hopes as parents they've set good examples handling their money.

Widespread ignorance about how credit cards work is one reason to be cautious about co-signing a card for a student.

"I have always encouraged parents to avoid co-signing for their children's credit at all costs," said McClary of Clearpoint, a nonprofit that helps people resolve debt problems. Should a child not pay the bill on a co-signed card, the parent would be held responsible. "Not only can it divide a family, it can destroy everyone's credit, if the situation goes wrong," he said.

It may also be difficult to find a student card that will accept a co-signer. Card issuers like Discover, Bank of America and Wells Fargo have that option, but it is not available from every bank, including Citi, one of the largest credit card issuers.

Given how hard the recession has hit household finances nationwide, it's also possible many parents will be unable to help their kids get cards, because their own credit has been damaged.

And even if they can get credit cards, some parents may think their kids aren't yet financially responsible enough to handle them. Philadelphia-area mother Rory Cohen said her son Tye, 19, has already had problems handling money, so a credit card is not an option.

In such situations, a debit or prepaid card may be the best choice. But both are less flexible than credit, because they use money already deposited. And they have other drawbacks, notably high fees.

Tye Cohen likewise ran up about $400 in debit overdraft charges in just a few weeks after opening an account.

That's why his mom now encourages him to use prepaid cards.

Although they come with high fees up front — a $5 to $10 activation charge and $2.50 to load more money on a card are common — prepaid cards limit spending to the amount loaded onto the card. For kids who've had trouble setting their own limits, this may be an option that offers parents peace of mind.

"Nobody knows it's not a credit card," said Rory Cohen. "But he can't overspend it."