The Debt Trap: Unspoken Link Between Credit Cards and Colleges

NYT ^ | 01/10/09 | JONATHAN D. GLATER

[TigerLikesRooster]

The Debt Trap Unspoken Link Between Credit Cards and Colleges

By JONATHAN D. GLATER

EAST LANSING, Mich. — When Ryan T. Muneio was tailgating with his parents at a Michigan State football game this fall, he noticed a big tent emblazoned with a Bank of America logo. Inside, bank representatives were offering free T-shirts and other merchandise to those who applied for credit cards and other banking products.

“They did a good job,” Mr. Muneio, 21 and a junior at Michigan State, said of the tactic. “It was good advertising.”

Bank of America’s relationship with the university extends well beyond marketing at sports events. The bank has an $8.4 million, seven-year contract with Michigan State giving it access to students’ names and addresses and use of the university’s logo. The more students who take the banks’ credit cards, the more money the university gets. Under certain circumstances, Michigan State even stands to receive more money if students carry a balance on these cards.

Hundreds of colleges have contracts with lenders. But at a time of rising concern about student debt — and overall consumer debt — the arrangements have sounded alarm bells, and some student groups are starting to push back.

[TigerLikesRooster]

Colleges pocketing money in return for helping out banks to market credit card on campus? I did not know this angle.

[TigerLikesRooster]

Ping!

[rabscuttle385]

What a surprise. (sarc)

[STONEWALLS]

“Credit card issuers say that they try to educate students to use cards responsibly”

....yeah right!....just like Budweiser tells the kids to be sure and drink responsibly.

[JasonC]

Anyone with a problem with this needs to be deported to a third world hellhole where credit is impossible to get.

The whole idea that people are harmed by being given choices is so communist and patronizing it makes me want to scream.

[STONEWALLS]

“she applied for a card at a booth on campus and then accumulated about $30,000 in debt, almost all of it on the card. In 2001 she filed for bankruptcy.”

....yep, and in a couple of years she’ll be stealing from her client’s trust funds to cover the fresh debt she’ll rack up.

[raybbr]

They’ll let all sorts of predators on campuses but God forbid you try to put ROTC or a an Armed Forces recruiter there...

[vetvetdoug]

When I was in the USAF, I couldn't get a credit card from anyone. No gas cards, no JC Penny, no Sears, and no MasterCard. They all turned me down because I was in the USAF. In the USAF I had a steady income and if I reneged on the debt I could incur an Article 15 and punishment and garnishment of my wages to pay debt. Now, I left the USAF and went into college where all of them were more than eager to give me a credit card. It didn't make sense to me until I read this article.

[Karma Police]

I see the scumbags at the beginning of each semester just tripping over themselves to put credit cards in kids’ hands. They know the freshmen willl go crazy, and they know they’ll be paying off their interest for years to come.

[stormer]

"...just like Budweiser tells the kids to be sure and drink responsibly."

So, what's your point?

[Toki]

/dies laughing
I LOVE IT! This is what’ve dreamed of doing when I went to my friends keggers (don’t drink, but It’s fun to watch). To bad no one passes out easily (If nothing else GT students can handle their alcohol :( )

[GOPJ]

The more students who take the banks’ credit cards, the more money the university gets.

Conflict of interest - - Nice to see the NYT's dealing with this - hope this is the first of many.

[pnh102]

... she applied for a card at a booth on campus and then accumulated about $30,000 in debt, almost all of it on the card. In 2001 she filed for bankruptcy.

I find this hard to believe. I was in college at this time and I got my hands on my first 2 credit cards while at college. The limits for these and most of my friends were never more than $500 or $1000 or so.

[Yo-Yo]

When were you in? I was in the USAF from 1977-81, and had no trouble getting a Sears card, then later a Visa. Auto loans through the Credit Union were also a cinch.

[kevinw]

When I was a student at the University of Southern Mississippi (1991-1993), credit card companies were offering credit cards to students. I got quite a few offers myself, but I turned them down.

[stainlessbanner]

The CC companies don't want responsible working folks, they want irresponsible college students who will rack up bills partying and shopping.

The Michigan alum should be up in arms that the alum association sold their information for $25M.

[Missus]

I was at university 1991-1994—as a sophomore, once I’d finally turned 18, I was given $15,000 in credit availability, on a total of two cards. Without a year-round job.

[informavoracious]

The starting limits are low. But if the student (or his parent) consistently pays on time, they will keep upping the limit.

The CC companies also know Mommy and Daddy will bail Junior out when he can't pay, because they won't want his credit to be ruined so early in life.

[vetvetdoug]

I was in from 1973-1983. The first four years I couldn’t get anything but Credit Union credit...I could forget the credit cards and I had no negative credit history. In 1977 I was in the NG and a college student and I could get just about any card I wanted. I think we just identified the year that the Credit Card companies loosened the requirements.

[pnh102]

My wife and I always paid our credit cards on time but we never got significant limit hikes. Maybe $50 here or there if we were lucky. One card my wife canceled a little over a year ago was one she got in college about 10 years prior. She's always paid bills on time and never carried a significant balance but the limit on that card stayed at $500. We only canceled it because we wanted fewer credit accounts to keep track of.