Despite rising concern about college students' debt loads, the nation's largest four-year colleges are disclosing students' contact information to credit card-issuing banks and earning up to millions each in annual fees by giving the banks the right to market on campus.
A USA TODAY survey reveals that each of the largest 10 universities — through its alumni or athletic association — now partners with a bank to issue co-branded cards to alumni and students. The deals exist at hundreds of colleges.
"They're getting less revenue from state governments and looking at everything they can to raise revenue," says the American Council on Education's Jacqueline King.
The partnerships don't violate any laws. But they're facing more scrutiny because they undercut some states' efforts to crack down on credit card marketing to students.
Legislators in states such as Tennessee have sought unsuccessfully to curtail these marketing agreements. In 2004, the latest year for which figures are available, three out of four college students had credit cards, with undergraduates holding an average outstanding balance of $2,169, according to Nellie Mae, a student-loan provider.
Universities can receive more than $2.5 million a year for marketing deals with one card company, says Robert Manning of the Rochester Institute of Technology. Under these deals, colleges typically give banks contact information of alumni and students. They often also give issuers the exclusive right to solicit at certain campus events.
USA TODAY's survey also finds that eight of the 10 largest universities, all of them public, say they allow other marketers access to student contact information as well under state laws that deem campus directories public information.
Consumer groups worry that these disclosures infringe upon student privacy and that card companies are preying on financially inexperienced young adults.
Travis Plunkett of the Consumer Federation of America adds that some students might get a co-branded university credit card as a show of school loyalty and pay little attention to the card's terms.
Universities point out that it's typically the alumni association, not the university itself, that strikes deals with the card issuers. (Alumni associations typically fund university programs, though.) They also note that the schools' logos on cards help promote the schools.
Kevin P. Hegarty, the chief financial officer of the University of Texas at Austin, adds that UT doesn't want to "block free commerce" by barring students from the university's co-branded card.
This story ran on USA Today on October 1, 2006.