Universities Get Commissions For Credit Cards Sold On Campus

This CNN report shows how universities are cutting lucrative deals to let credit card marketers push their wares on campus. Schools will get commissions based on signups, or even based on the amount students charge on their new cards. Certainly there are kids who will use the credit cards prudently, but equally certain is that they are in the minority.

We think “Consumerism 101″ should be a required freshman course, but instead these colleges are lining their pockets with their student’s naivete. — BEN POPKEN

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  1. Anonymously says:

    They didn’t’ really hide this fact at my college. There were enrollment forms for University branded cards in lots of the classrooms. If that doesn’t screen “kick back”, I don’t know what does.

    Are college kids really that dumb?

  2. KevinQ says:

    When I was in undergrad, the credit card companies gave the student groups the opportunity to sell their credit cards in exchange these types of kickbacks. I tried to stay away from it in my student groups, but I know other groups that made good money off of it.

    So now the companies and the universities are just cutting the student groups out of it? Nice.

    K

  3. clarient says:

    The first thing they ask you when you register for classes is if you want to sign up for a Wells-Fargo University linked account.

    And then they bribe you with free pizza – oh, but you have to sign up for this here CARD. It’s shameful.

  4. needhelp says:

    although i didnt do exactly what the article talks about, i did sign up for a loan for 30K to cover school and home expenses for a year. i think i heard about it through my school, but my memory is lacking. i filed a fafsa but didnt qualify for any federal loans, so i had to get a personal loan. that was a couple of years ago and im much more financially savvy now, at least i hope to think so. anyway i signed up for a variable interest rate, i dont remember what it was at the time, but now its very close to 10%. it seems to keep creeping upward. i did look to refinance to a fixed apr but only found one lender that would go from variable to fixed. key bank. i actually had my fiance, now wife, talk to a financial expert in her school about this because i thought it might be shady, and he said he had never heard of any lenders that refinance from variable interest rates to fixed.


    my question is have any of you heard of doing this, that is going from variable interest rates on personal loans to fixed interest rates? its gotta be possible.

  5. medalian1 says:

    The good news is that that mom got to keep her tax return instead of having to pay down her son’s debit.

  6. iMike says:

    That’s the way an “affinity” card works. Nothing new here.

    The real story, which I’d like to see Consumerist report on, is that these universities were taking kickbacks on student loan origination.

  7. dwarf74 says:

    My student organization was desperate for money, and we whored ourselves out to one of these organizations.

    The school didn’t get any cut whatsoever; their tie to legitimacy was our student organization. Since we were involved, they were able to cut the school out of the loop.

  8. mac-phisto says:

    @Greg P: i don’t think it’s fair to dismiss this with a simple “college kids being dumb”. doesn’t it bother you now knowing that credit card companies were so prolific on your campus? enrollment forms do not belong in classrooms. nor do they belong in front of classrooms, in the registrar’s office, or anywhere else on campus. that campus is designed to be a center for learning, not an applicant pool for loan sharks.

    these companies are pouring billions of dollars into a marketing tool that harnesses our youth with debt in a practice that requires the university to violate its moral & ethical responsibilities to its students.

    i’m not blaming credit card companies. you can’t expect scum to grow a conscience. but the university should be held responsible. i went to penn state – a school which had strict standards for what was allowed on campus. up until a few years ago, no building could be named for a corporate entity. suddenly, POOF! MBNA career center goes up. students’ rights to assemble were restricted to mandated “free speech zones”, yet credit card companies could peddle their debt virtually anywhere on campus. welcome packets, textbooks from the student bookstore, biweekly offers in the mailbox, flyers all over student billboards – it was a bombardment.

    so what can be done? i think student unions/governments have a responsibility to petition university boards & executives to break the chain. legislators should lean on schools that allow this practice by threatening to cut funding. & i think alumni have a duty to take an active role in curtailing this practice. we were there. we saw it & we don’t think it’s appropriate any longer.

    excuse me while i draft a letter to the university.

  9. myrall says:

    @Greg P

    I really was that dumb. I was 18, 2 weeks into my first year of college and out on my own for the first time. I’m not exactly sure I even knew what I was signing up for when I signed up on a sidewalk after class one day. I got a free t-shirt and promptly forgot about it. Until 8 years later when I saw an open Discover card on my credit report. I’m fortunate that nothing nefarious happened.

    I wasn’t stupid, I just didn’t understand the ramifications of what I was doing. Of all the things my folks taught me about money, credit cards wasn’t one of them. I wish there’d been some kind of Consumerism 101 at my college.

  10. Cathoo says:

    The credit card companies on Canadian campuses always stressed that the point of getting these cards was because you’d be helping to fund the school without doing anything! Show your school spirit! Pay our exuberantly high interest fees and we’ll give your school money!

  11. e-gadgetjunkie says:

    I was angry at my school when they paired up with HigherOne (it seems a lot of schools are doing this) and now we can only get our refunds if we have this card activated. The best part was they didn’t make this clear until three weeks after refunds came out. The school gets a cut if you have your refund put on this card into a debit account.

  12. magic8ball says:

    I’ll second the “mandatory Consumerism 101″ idea. I had a freshman roommate a few years back who came to college with a brand-new checking account and no clue how to balance her checkbook. She wasn’t stupid, it’s just that no one told her how or why to do it. People like that don’t understand how credit card companies operate.

  13. spugbrap says:

    I was dumb enough to sign up for several cards on the way to/from classes, about 10 years ago. I’d encounter a desk on the quad where they were offering free stuff.. a slinky, a candy bar, a t-shirt.. all you had to do was sign up for a credit card. I knew I could just cancel the credit cards I didn’t want, but in the meantime, I got free stuff!

    It wasn’t until a few years later that I learned that having several credit card accounts open, or even opening/closing accounts, negatively impacted my credit rating. I wish someone had explained that to me sooner.

  14. govkid201 says:

    yeah my parents definitely told me the right way to go: don’t get a credit card in college. its working. all i have is my debit card and its hard to get debt going on a debit card…
    i agree with the statement about the financial literacy course. virginia tech has one but it is an online optional course available to all students. it is never required. i think it should be a mandatory course for all freshmen and should focus on credit cards, loans, check books, and how to get a savings and recover from debt.

  15. wikkit says:

    Penn State, my alma mater, handed out MBNA applications at every turn. Every book from the campus bookstore came with a credit card signup form, and they were posted in every classroom. The name of their career services building…..MBNA Career Services Building. I’d be surprised if the building wasn’t ‘donated’ by MBNA for dutiful service by the university.

  16. Topcat says:

    I love that things like this completely dismantle taking responsibility for your own actions (the talking Camel made me start smoking!). One would imagine that university students are wise enough to at least read what they’re signing on to, and those that aren’t, well…they’re going to get the surprises in life. It’s not up to the university to teach adults how to not rack up a credit debt, it’s the students’. And universities do make these kinds of programs available- most are offered through the career/personal services department.

  17. thegreatgatsby says:

    @Topcat:
    There’s a difference between failure to take responsibility for one’s own actions, and a deliberate conflict of interest.

    The purpose of a college or university is to educate their students and secure their futures. By recieving a kickback for student sign-ups for credit cards, they are encouraging students to over-consume, generally with distractions from their studies. Instead of teaching them life-skills and responsibility, they are promoting consumer-culture.

    Haven’t you ever read Brave New World?

  18. JohnMc says:

    Greg P,

    Yep they are that dumb. I say the kids are smart, but nobody is teaching personal finance. Waiting till college to get it is too late. This is the kind of stuff that should be taught in the Junior/Senior year of High School. And the family should be teaching these skills as well.

  19. JohnMc says:

    “Haven’t you ever read Brave New World?”

    Somma, Ummm so goooood….

  20. acambras says:

    If I were still on campus, I would set up a table in the student union, with big posters warning about how the credit card company at the next table will completely screw you over. I would have an interest calculator, so they could see how much it costs to borrow money over years at 20%. I would have handouts that define and explain nefarious things like “double-cycle billing.” I would point out that that nice-looking, friendly guy at the table will not be at the call center in Bangalore that they’ll be routed to when they have a problem with the account. I would give them information about how to get their free credit report copies. I would warn that applying for a lot of cards could bring down their credit rating. I would provide useful information about the right ways to build credit.

    And in the first hour, University Security would probably come haul my ass off campus.

  21. some_stupid_nut says:

    I get free blankets and t-shirts at sports events with my college branded credit card! :)

    I think I am spending a bit more money than usual with my credit card. The thing is I am still within what I can pay. I don’t see how people can go crazy spending, interest rates are up the wazoo!

    @govkid201, I think I only know one person who actually did that financial program. I know all my friends are envious of my VT card. :) Its got the stadium on it!

  22. 2Legit2Quit says:

    I will say this, here is my advice as a guy who works @ a credit union…

    DO NOT SIGN UP FOR A CREDIT CARD RANDOMLY FOR FREE SHIT!

    With that said, it’s sad that in schools we don’t focus more on financial literacy. I’m lucky that my mom is an accountant and VP for a credit union so I’ve learned how to do all this shit, but it scares me with a lot of other people who have no idea about their credit scores and how what they do at 18 can affect them for the next 10 years.

    needhelp, I can’t tell if your being sarcastic about your student loans, but if you want a fixed interest loan, try a local credit union that you’re eligible for around you. They are usually more lenient with who they loan to then a bank.

  23. 2Legit2Quit says:

    acambras, if you go to a public university, security coming and hauling you off would be in violation of your first amendment rights :)

  24. Topcat says:

    @thegreatgatsby: I disagree- there’s a huge jump in logic between “sign up for a credit card that we get kickbacks for” and “spend more money than you have”. And I’m not one to think universities are evil for taking little cut here and there (would you rather it goes 100% to the credit company?). In fact, I’d say its good to get a credit card during university and build up a decent credit rating so you don’t finish school with all the financial power of an 18 year old. So what if my University gets a cut of it? It means more programming for me while I’m there.

    Sure, some courses in personal finance (preferably during highschool as not everybody goes to university) would be great, but vilifying a school because they have someone handing out t-shirts with credit cards? Surely there are better causes for consumerism.

  25. MarkMadsen'sDanceInstructor says:

    The saddest thing at my university was that they frequently got people to sign up for credit cards for nothing more than small stuffed animals. No cash bonus, no promise of rewards – just stuffed animals.

  26. jackmcass says:

    I am thankful to be working at a University that allows for absolutely no solicitation. No credit card companies, are allowed to set up booths on campus.

    Most request space for a booth, and then when turned down, set one up anyways. If they do, they are immediately removed from campus under threat of being removed by police.

    All posters and banners selling product or services must be approved, or their signs are immediately ripped down.

    As are result, our students are not being hasselled, and the campus is much cleaner as well. Our students should be able to walk on their campus without having to feel like the university they attend is whoring them out for more of their hard earned money.

  27. tallyman says:

    The university that I recently graduated from used HigherOne as well. It was a huge crock. The reason being that they essentially migrated from a normal student id card to a HigherOne ID card. Essentially this caused a few things to happen that in my opinion should be illegal to impose on students halfway though college that are required to have these services or flunk out.

    1. I was forced to use this new id card to access any school resources.

    2. HigherOne then had all my personal information to which there was no way I could opt out of.

    3. HigherOne opened an “account” for me in a “bank” (there is not a physcial bank as far as I knew) in Texas or something with the CS representatives in Massachusetts I believe it was.(of course this translates into you’re going to get fees out the rear anytime you take money out at a atm etc)

    4. I don’t know the specifics but a form of the financial aid given to students ( I think it was money you were given after tuition ) was automatically put onto this card just as if it had been deposited to a bank.

    5. I don’t think you actually had to opt out of a credit card but it was sneaky how they tried to get you to make it into a credit card and essentially thousands of students signed up for it thinking they had to have that or the student id wouldn’t work correctly.

    6. Reading most of the information you see why they’re doing this as the information about the card translated into fees, fees, fees, here are some more fees. Thankfully I just used it as an ID card.

    After graduating I had to call them a few times to close the account but it wasn’t that much of a hassle. Still, it is pretty inexcusable to essentially force students to have something like this and give all their info to a third party.

    There seriously should be laws dealing with this stuff.