When I went to college, I was armed with a word processor (because I couldn't afford one of the newfangled computers), flannel jeans (I was a Florida girl who couldn't wait to experience her first Boston winter) and a toaster oven (for making toast and baking cookies). What I didn't bring, though, was any lick of common sense about credit or credit cards or interest rates. (Not entirely my fault - growing up, my parents were very hush-hush about finances. Talking about finances was like talking about that crazy mouthy aunt with chin hairs - you just didn't do it, but if you had to, it was always in a low voice and the topic was always dropped after a minute or two.)
So naturally, being a broke college student, I signed up for several credit cards. The credit card companies were everywhere on campus. What a deal! Not only did I get credit cards, I got some cool T-shirts and water bottles too.
I was thrilled when the credit cards came in the mail. I felt so "grown up." And the amount of money I could charge - one card had a $3,000 limit! - boggled my mind. Free money! I got my hair cut at a tony place on Newbury Street. I developed an obsession with expensive perfume. I treated my other broke college friends to dinner. I charged right up to my $3,000 limit.
When the bill came, it was all I could do to make the minimum payments. I had a job, but the majority of that had to go toward my work-study commitment. Long story short - I DID pay off the credit card - but it took YEARS to do so.
When I read "The dirty secret of campus credit cards" in BusinessWeek, it brought back a lot of memories and questions. Why in the world would a credit card company give a $3,000 limit to a college student who stated on her credit application that she had no job? But marketing to college students - easy targets because of their limited financial resources and naivete - has been part of campus culture for decades.
Why? Colleges and universities benefit from "sweetheart deal" kickbacks. We're not just talking free dinners. We're talking about secretive deals worth $20 million dollars per university. Schools earn "a set fee for each student, alumnus, or professor who signs up for a credit card, as well as a percentage of overall charges made on the cards." In exchange, the school gives credit card companies access to student lists and exclusive marketing privileges at school events.
Can you blame the schools? State schools are having an especially hard time as they deal with budget cuts. But in an era when more than 85 million people have joined the national Do Not Call list (and that figure is from 2005!), why are secret deals being made to release student information to the types of companies that many of us have chosen to avoid?
Well, that may stop. State legislatures in New York, Texas and Oklahoma voted earlier this year to clamp down on marketing credit cards to college students. And I understand that this is an issue that Congress will be examining in greater depth.
Don't get me wrong. I am not against issuing credit to college students or stifling capitalism. I do think, though, that college students - and many adults too - don't understand the increasingly complicated terms and conditions of credit cards, or even the basics of how they impact their credit and financial health. All I'm saying is - let's do this responsibly, and include in their education not just English, calculus and biology, but the ability to understand and manage credit cards wisely.
