College campuses offer a lucrative venue for companies marketing credit cards. Walk on any campus and you will see representatives from various companies giving away shirts, mugs and applications for credit cards. Students are an easy sell. Many are away from home for the first time and are asserting their independence. The idea of having credit cards in their name can seem like the ticket to financial freedom.
Banks have a tradition on many campuses. At a campus in Michigan, Bank of America has a relationship with the college that grants it the right to use student enrollment lists. The bank gives the college money for any new coeds who get credit cards with them. Contracts like these often offer universities even more money, if their students carry balances on those credit cards. These mutually beneficial relationships put students in the middle at a time when many of them are not yet able to budget or fully appreciate the long term effects of debt. As a result, many student groups are raising concerns about credit card issuers exploiting students. Even the politicians in Congress have been examining the contracts between academic institutions and banks, as hearings were held about the issue last summer.
Credit card companies claim they are acting in good faith and helping students learn to become responsible consumers. When students have credit cards of their own, they are laying the building blocks for their credit report and learning how relationships with banks work. Banks offer seminars on responsible spending, budgeting and paying off balances on credit cards. Additionally, they say the credit cards offered to students have lower limits and more restrictions than those marketed to graduates. Some banks are even giving students the option to open debit cards in lieu of credit cards. Universities claim their relationships with banks violate no laws and bring in resources that are used for valuable programs and scholarships. Even so, many have taken steps to limit access to student information when they enter into new contracts with banks.
Like everyone else, students are feeling the affects of the economic downturn. Some may open credit cards to help with expenses. The presence of banks on campuses will remain a part of college life, but it appears that it will be a less exploitive presence than it has historically been. Students are likely taking notes during the current economic downturn and will research and understand how to be responsible credit card consumers.
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