Colleges have been greatly scrutinized as of late when it comes to the on-campus credit card marketing agreements they have formed with card issuers. As the result of all of the attention these deals have been receiving in the media, several universities have been more or less forced to disclose the terms of these deals.
In accordance with their agreements with Bank of America, the credit card company is allowed to market its cards to students attending these universities and to use the university name on the card. In return for carrying one of these cards, cardholders can potentially enjoy some on-campus perks – particularly those that are “big spenders” with their cards. Nonetheless, all three universities claim that the cards are most aggressively marketed toward alumni groups and boosters rather than students. Furthermore, they claim that students make up only a small percentage of the total cardholders.
Of course, the universities and Bank of America are defending their agreements, since it is so profitable for all of the organizations involved, As Iowa State University Alumni Association President Jeffery Johnson said, “We believe the agreement in place between Iowa State University, its Alumni Association, and the Bank of America is appropriate and mutually beneficial.”
A closer look at the data does support the assertions being made by the universities. In fact, of the 28,000 people carrying an Iowa State University card, only 289 are students and they carry an average balance of $1,100. The University of Iowa only has 396 student accounts, which amounts to 1% of cardholders, and the 208 active cards have an active balance of $1,028. At the University of Northern Iowa, there are only 69 open accounts with 55 being active and having an average balance of $1,148.
The amount of money brought in from these credit cards makes up a large portion of the income for the alumni associations. So much so that the University of Northern Iowa has stated that it would have to dramatically reduce alumni engagements and might have to cut staff if they were forced to rein in their credit card agreements.
In my opinion, college students are adults that should be free to make their own decisions. At the same time, they should be properly educated in order to ensure they make wise decisions. Since these agreements include special provisions regarding providing credit card education, I see no problem with the agreements continuing. Johnson agrees, saying, “I believe that the primary issue is not about sheltering students from credit cards. They are adults, and they will, can, and do carry credit cards. The issue is about learning how to use credit responsibly, which is an issue that should be addressed more frequently everywhere, in school and at home.”
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