 |
 |
 |
 |
 |
|||
 |
|||
 |
|||
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
A brief history: Marketing credit cards on campus The explosive growth of credit card use on college campuses is the result of the deregulation of retail banking, beginning in the late 1970s. Corporate retailers and local banks traditionally offered credit cards to their best clients as a strategy for enhancing customer loyalty. In the early 1980s, when the American banking industry faced enormous losses in its nonconsumer loan divisions, it began the rapid and aggressive expansion of its marketing of high-cost, unsecured "revolving" credit accounts. Over the last two decades, credit cards have been more than twice as profitable as the industry average for other bank products (U.S. Federal Reserve, 2004). With the impending saturation of the lucrative market of middle income households in the late 1980s, banks began to cautiously explore the long coveted but potentially risky college student market (Manning, 1999; 2000). Initially, unemployed students under 21 years of age were required to obtain a parental co-signer (late 1980s). However, the relatively low default rates (explained below) and high profits of this market niche precipitated an unprecedented national marketing campaign that targeted increasingly younger and inexperienced consumers. By the early 1990s, credit card issuers rescinded the parental co-signature requirement and offered increasingly larger, cumulative levels of unsecured "revolving" lines of credit (Manning, 1999; 2000; 2003). Hence, the soaring demand for credit cards on college campuses (featuring the dilution of traditional bank underwriting standards) was shaped initially by efforts of the newly deregulated banking industry to find new clients with relatively low levels of outstanding debt and potentially high incomes. Today, lucrative "exclusive" marketing/licensing contracts with higher education institutions (millions of dollars per year for the largest public universities) and the increasing cost of an undergraduate education, together with intensifying "competitive consumption" pressures, have fostered the credit/debt dependent environment that typifies the current undergraduate college experience. Indeed, the conflict of interest between the monetary "royalties" received by colleges in return for unrestricted, on-campus marketing campaigns (including the erosion of personal financial privacy of students/staff) and the general neglect in promoting student financial literacy has generated heated public-policy and academic debate (cf. PIRG, 1998; Manning, 1999; 2000; Jamba-Joyner, et al, 2000; State of Iowa, 2000; GAO, 2001; Hoover, 2001; Bianco and Bosco, 2002; Ohio State University, 2002; Norvilitis and Maria, 2002; Tan, 2003; Hystad and Heavner, 2004).
|
|||
