Card Issuers and Colleges Team Up on Students |
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by: Janna Weiss
You’ve heard about the lengths credit card companies will go to in order to attract young student borrowers on college campuses. Maybe you’ve even been targeted by these companies yourself. Their endeavors can feel a bit smarmy; after all, a free t-shirt is nothing compared to the damage a reckless cardholder can do to their own credit score. And many of the deals offered on college campuses are nothing to write home about. Sure, you might get an iPod, but you’ll pay for it in high fees and interest.
Some student groups have gone so far as to classify these marketing tactics as predatory. Why, then, are banks still allowed to peddle credit cards to students? Because they just might have a contract with the host college.
For example, Bank of America has an $8.4 million contract with Michigan State, and a $25.5 million contract with the University of Michigan. JP Morgan Chase is also contracting with about 25 universities. These deals grant the banks access to students’ names and addresses, and also kick some money back to the universities whenever a student signs up for one of the cards.
Critics say that this system is setting students up for spending beyond their means, but proponents insist that the contracts bring in much-needed revenue to the schools. A Bank of America spokesperson stated that student credit card limits are kept low – an average of $2,500 – to encourage responsible spending. Arizona State also partners with Bank of America to provide educational seminars about getting out of debt and staying debt-free.
Targeted marketing is nothing new, but the universities that pair up with credit card issuers are obligated to divulge contact information for their students, alumni, staff, and even people who hold season tickets to college sporting events. These pairings provide marketing opportunities for banks and sources of revenues for struggling campuses. And if you’ll recall the past agreements between colleges and student loan companies, you’ll remember that these tactics are nothing new.
Still, vocal opponents, such as Representative Carolyn B. Maloney of New York, call the sharing of student’s private information “outrageous”. Student groups worry that colleges have no incentive to teach students about the very real dangers of misusing their credit cards. After all, the schools receive money when students sign up for the cards. Steering students away from cards they can’t really afford doesn’t seem like a good way to keep those revenues rolling in.
At the end of the day, it’s up to the students themselves to learn about debt, responsible spending, and reasonable credit card terms and conditions. Once they’ve educated themselves, they’ll know how to say “thanks, but no thanks” to pushy credit card marketers – even those with a college’s seal of approval.
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