The debate over mixing college students with credit cards wages on. According to experts, many of the credit card applications that are flooding college student mailboxes are endorsed by the colleges they are attending, which only further serves to encourage the students to apply and then spend beyond their means.
This may not seem terribly high, but considering that college students are already starting off in debt as the result of college loans, it certainly doesn’t help a person that is just getting started.
It is no secret that nearly every major college and university has some type of relationship with a credit card company. You can’t really fault the colleges for forming these relationships, as these deals can bring millions of dollars into the college’s bank account. Receiving this form of steady income is quite appealing when all it requires is handing over some marketing rights to the credit card companies they partner with.
The reality is that the credit card companies usually receive royalty fees, amounting to millions of dollars annually from these institutions. The college then hands over a mailing list of its faculty, students, and alumni. The college or university also provides the credit card company with exclusive marketing rights at school events, including athletics. Then, every time a student signs up for a credit card, the college or university receives some more cash. To sweeten the deal even further, the university also receives a percentage of the amount the student charges to the card. So, as you can see, this deal really can bring in some substantial money to the college or university.
But, is it equivalent to “selling out” the students attending the school? After all, colleges and universities are well aware of the potential risks involved with carrying a credit card, aren’t they? Are there guidelines in place for the proper marketing of these products on campus? Or, is this just one more way for colleges to make money at their students sometimes significant expense?
Many consumer advocates see this practice of aggressive marketing on campus as unethical, representing a significant conflict of interest for the schools. As a result of their petitioning and their objections to the practice, Congress is taking a closer look at the marketing tactics of credit card companies aimed at college students. In fact, they intend to hold hearings later this year that will take a closer look at the relationship between colleges and universities and credit card companies. One hope is that colleges and universities might be persuaded to use some of the money they receive to help pay for debt management courses that all students will be required to take before they can obtain a credit card.
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