Hi kh10,
The issue of marketing credit cards to college students is a big one,
and one that has resulted in a lot of students becoming mired in debt
well beyond their ability to pay.
Your question covers a lot of ground, so in an effort to keep my
answer within your pricing scope, I’m going to just touch on each
topic and give you a variety of links that will further explain the
credit card marketing situation to you.
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HARM TO COLLEGE STUDENTS
================================
The primary harm to college students is the additional debt they take
on via credit cards, usually in addition to large school loan debt
they have already accumulated. The unpaid debt becomes a burden and
the student’s credit record becomes seriously marred.
“Late payments and delinquencies will mar a student's credit report,
and a bad report can affect his or her ability to land a job or go to
graduate school.”
The credit card binge
College students are engaging in some risky spending
http://www.usnews.com/usnews/edu/college/articles/brief/stcred.htm
According to research done by U.S. PIRG, the national lobbying office
for the state Public Interest Research Groups:
“Forty-one percent (41%) of all graduating seniors carried credit card
averaging $3,071. More of those students (48%) with student loans had
credit card debts, which averaged $3,176.”
Hearing Shows Credit Card Industry Continues Aggressive Marketing Of
Overpriced Credit Cards To Students, Exacerbating Their Student Loan
Debt Problems
http://www.pirg.org/highered/highered.asp?id2=7947
You can read the whole study here:
The Campus Credit Card Trap
Results of a PIRG Survey of College Students and Credit Cards
http://www.pirg.org/consumer/campus/
According to a Nellie Mae survey, 21 percent of undergraduates with
credit cards carry balances between $3,000 and $7,000 - a 61 percent
increase over the 2000 numbers. Graduating students average $20,402 in
combined education loan and credit card balances.
The other unspeakable harm that comes to some students is a result of
guilt and fear of not being able to pay their debt – Suicide.
“Sean Moyer, a National Merit Finalist with a full scholarship to the
University of Texas, racked up over $10,000 in credit card debt. In
February 1998, frustrated by mounting credit card bills, the
22-year-old Moyer hanged himself in his bedroom closet.
Mitzi Poole , an 18-year-old freshman at the University of Oklahoma,
committed suicide in 1997 by hanging herself with a bed sheet in her
college dorm room. According to reports from her mother, her checkbook
and bills were spread out on her bed when she committed suicide.”
College Students Easy Prey For Credit Card Solicitors
http://www.theguardsman.com/20021106/easyprey.html
===================================================
HOW CREDIT CARD COMPANIES MARKET TO STUDENTS
===================================================
Again, according to the PIRG study –
“More than half of students (61%) responsible for their own bills
reported they had obtained cards at campus tables while fewer than
half of those who reported that their parents helped with payments
(41%) obtained cards at tables.”
The study confirms that students who apply for credit cards at tables
on campus have more credit cards and carry higher balances than those
who don’t.
Besides setting up tables on campus, Credit card companies also:
“… routinely bombard students with offers, by E-mail, by stuffing them
in bookstore bags, by giving them away with a free T-shirt.”
The credit card binge
College students are engaging in some risky spending
http://www.usnews.com/usnews/edu/college/articles/brief/stcred.htm
===================================================
NOT ILLEGAL – BUT RULES ARE CHANGING
===================================================
Pending legislation –
College Student Credit Card Protection Act amends the
Truth-in-Lending Act to require the following on a credit card
application from a consumer under the age of 21: (1) a signature
indicating joint liability for debts in connection with the account by
another individual having the means to repay the debts incurred by the
under age consumer; (2) submission of financial information indicating
an independent means of repayment by the consumer; or (3) proof of
completion by the consumer of a specified credit counseling course.
College Student Credit Card Protection Act
http://www.acsa.com/congress/c107s1HR184fulltext.html
Other links to HR184
http://www.creditcardnation.com/federal_legislation.html
Status of HR184
http://thomas.loc.gov/cgi-bin/bdquery/z?d107:HR00184:@@@X
Although it’s not illegal for a credit card company to offer
applications to students over the age of 18, many colleges are banning
the practice of allowing credit card companies to set up tables on
campus—
From the PIRG Report:
“The state PIRGs also recommended that campus administrations
establish mandatory debt education programs, free from credit card
company interference, and also ban or strictly regulate credit card
marketing on campus.”
Petition urges UD to ban card vendors
http://www.review.udel.edu/archive/2001_Issues/03.06.00/index.php3?section=1&article=2
Campuses warding off credit card solicitations
http://www.news-journalonline.com/2002/Feb/2/BIZ2.htm
And other legislation is being put into place to protect students –
“A bill in Tennessee will ban credit card promotions in public
colleges. A California bill will ban card marketers from handing out
free gifts unless they are accompanied by educational brochures. A
Louisiana bill would prohibit the sharing of names and addresses of
students to companies, by school administrators.”
CREDIT CARD DEBT
http://www.andrews.edu/SM/2000-2001/Past/2001/050201/xCredit.html
==========================
MBNA
=========================
MBNA is just one of many credit card companies marketing to students,
but it's the biggest one.
“MBNA is the recognized leader in affinity credit card marketing, with
endorsements from more than 5,000 organizations, including
professional groups, college and university alumni associations,
corporations, sports teams, and financial institutions.”
MBNA
http://www.hughessupply.com/hughesplus/financial_services-1.html
“First USA, another major college card issuer, recently donated $16
million to the University of Tennessee for exclusive rights to market
their card on the UT campus. MBNA has donated big bucks to several
schools, including $2 million to Manning's own Georgetown”
Credit-card companies catch college students
http://www.dailyemerald.com/vnews/display.v/ART/2000/09/29/39d4bb282
“MBNA for example, has "affinity relationships" with about 700
colleges and universities. I understand that MBNA sends mailings to
roughly 100,000 freshmen before they even arrive at school. And then
of course, on campus there are additional credit card marketing
initiatives (not just by MBNA, of course). So it's probably not
realistic to think that you can just "keep them away."
Teaching students credit card responsibility
http://moneycentral.msn.com/articles/tscript/091302.asp
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PUBLIC SERVICE ANNOUNCEMENT
============================
Any attempt at public service announcement will first of all have to
appeal to college students, secondly should not take the tone of
“telling them what to do” , and thirdly should provide real life
information and warnings about how fast debt can spin out of control.
And even then, will they listen?
The transcript in the above money central article discusses educating
students about credit card responsibility.
An example --
PUBLIC SERVICE ANNOUNCEMENT
COLLLEGE STUDENTS AND CREDIT CARDS: SETTING THE GROUND RULES
http://www.scacpa.org/displaycommon.cfm?an=1&subarticlenbr=272
I would suggest a public service campaign to parents as well. They may
be in better position to coach and monitor their college student.
============================
MORE INFORMATION
============================
This report was originally released at the National Press Club in
Washington, D.C. on June 8, 1999; the press conference was sponsored
by the Consumer Federation of America.
“Overall, more than 70% of all college students have credit cards and
their debt is escalating rapidly.”
CREDIT CARDS ON CAMPUS:
Social Costs and Consequences of Student Debt
http://www.creditcardnation.com/report2.html
So, that’s a solid overview of the status of credit card companies
and college students. Use my search terms below for more information.
There were MANY articles on the topic. Thanks for your question.
-K~
search terms:
credit card marketing college student
credit card debt college student
credit card debt student suicide
MBNA college campus promotion |
