With connections between colleges and corporate vendors under increasing scrutiny -- and student indebtedness among the top talking points in Congress these days -- colleges’ ties to credit card companies are naturally attracting attention. A new survey, The Campus Credit Card Trap, from the U.S. Public Interest Research Group (PIRG), finds widespread student support for restricting aggressive marketing practices on campuses. The survey also describes strategies banks use to gain access to students -- about a quarter of whom say they’ve used their credit cards toward tuition costs.
“Banks are marketing aggressively through a variety of channels. They’re calling students on the phone, they’re mailing to students, and they’re using a combination of on-campus and off-campus tables where they give away products, ranging from offers for sandwiches, offers of food and pizza, all the way up to iPod shuffles,” said Edmund Mierzwinski, consumer program director for U.S. PIRG. The organization manages the “Truth About Credit” campaign.
“We are asking campuses across the country to change the way they either market on campus to students directly or the kinds of exclusive marketing arrangements they have to provide students with a university-branded credit card,” Mierzwinski said.
The survey, of more than 1,500 students at 40 campuses in 14 states, found broad support among students for limiting credit card marketing on campuses. Eighty percent said they supported at least some limits. There was strong support for restricting access only to promotions for cards with fair terms and conditions, and opposition to colleges' sharing or selling lists containing student contact information. “Many credit card companies encounter no difficulty in securing information of current students at colleges for marketing purposes,” the report notes. “It is also true that some state public records laws compel public universities and colleges to sell their lists of student information as public records, to anyone.”
The issue of sharing or selling student data has attracted a lot of attention in Iowa, in particular, due in part to a September Des Moines Register series on the subject. The U.S. PIRG report devotes significant space to the University of Iowa-branded Bank of America card marketed to students ("Imagine the convenience of being able to purchase supplies for your classes, without worrying about carrying a lot of cash"), and the roles of the university and Alumni Association in providing the bank with contact information for undergraduates. University alumni associations, like Iowa's, benefit financially from the affinity, or university branded, credit cards, by lending the university's name in exchange for fees.
In an interview Thursday, Steve Parrott, the spokesman for the University of Iowa, said the terms of the agreement with Bank of America have since been renegotiated. They are no longer providing student information to the bank, he said. But, he added, under Iowa law, any information in the directory not restricted by individual students, staff or faculty is publicly available under state open records laws.
Nor, under the new terms of the agreement, Parrott added, can the bank directly market to students on campus through tabling at the student union, for instance.
In the U.S. PIRG survey, about three-quarters (76 percent) of students said they’d stopped at a table to either apply or consider applying for a credit card -- with the best strategy for getting students to stop being free gifts (T-shirts, Frisbees, food, etc.). Notably, the possibility of banning free gifts gets less support from students than all the other restrictions on campus marketing practices proposed.
Mierzwinski added that in some cases, even when colleges might impose limits on commercial vendors, companies can gain access by renting table space on campus from student groups -- either for a certain set fee for the day or for a dollar or two per credit card application completed.
The survey found that 25 percent of student respondents had paid at least one late fee, 15 percent had paid at least one over-the-limit fee, and 6 percent had at least one card that had been canceled for non-payment.
New York Attorney General Andrew Cuomo recently began investigating colleges' ties to credit card companies. And the Ohio Attorney General, Marc Dann, has been working with Ohio State University's law school to challenge deceptive credit card marketing practices on campus. In 2007, his office filed suit against Citibank, Elite Marketing, and Potbelly Sandwich Works for alleged deceptive practices because advertisements on Ohio State's campus promising free Potbelly fare didn't include the catch, Dann said -- that students complete a credit card application first.
The suit against Citibank and the marketer are still pending. But Dann's office recently settled with Potbelly after it agreed to fund screenings of a documentary on debt -- and provide free sandwich vouchers to lure students to come see it.