Colleges, alumni associations and related groups were paid $83.5 million in 2009 under agreements with credit card companies, according to a recent Federal Reserve report. Under the credit card agreements, schools and affiliated groups were paid for each new account they generated. How many of those credit card accounts were with students?
Of the agreements reported, about 40 percent were with colleges and 33 percent were with alumni associations. The rest were with foundations and other organizations affiliated with universities.
The agreements resulted in the opening of about 53,200 accounts last year. In total, the issuers reported having about 2 million accounts open under such agreements.
The report does not specify how many accounts were opened by students; some or all may have been opened by alumni or faculty, the Fed notes. The report also does not include credit card accounts opened by students independent of the agreements.
Credit card companies have and will continue to commit considerable resources to recruiting students to their credit card products. They know that some students are very naïve about debt and more likely to charge up credit card debts which their parents will probably try to pay off. They also know that students with credit cards will eventually become working adults with credit cards and the source of millions of dollars in future revenue. But aren’t we doing our youth a disservice when we allow them to accumulate large debts in their vulnerable college years? Even though this year’s credit card legislation restricts credit card access for those under 21, juniors and seniors in college are just as vulnerable to abusing debt as their younger counterparts.