News Room
For Immediate Release:
February 19, 2004 Contact:
Brad Heavner
MaryPIRG
(410) 467-0439
Cheryl Hystad
Maryland Consumer Rights Coalition
(410) 366-1965
Survey Reveals Aggressive Marketing Of Credit Cards Continues On Many Maryland College Campuses: Education Of Students About Credit Card Use Is Minimal
A number of colleges in Maryland continue to allow aggressive marketing to students, including tables offering free gifts for applying for a credit card, in spite of concerns over the last few years about aggressive credit card marketing to college students. In addition, credit card vendors are setting up tables on campuses in direct violation of university policies and education provided to students about the proper use of credit cards is inadequate, according to a new report released today by the Maryland Consumer Rights Coalition and the Maryland Public Interest Research Group (MaryPIRG).
Credit card companies solicit college students through a variety of methods, including direct mail marketing, the Internet, tables set up on campus offering students "freebies" (i.e. t-shirts, water bottles, compact discs, posters) for those who apply for a credit card, and affinity cards (an exclusive agreement between a credit card issuer and a university to market cards with the university's logo), according to Brad Heavner, Director of the Maryland Public Interest Research Group. Credit card issuers hire vendors to conduct tabling events on campuses.
"Credit card companies market aggressively to college students, in spite of documented concerns that many students are incurring unmanageable amounts of credit card debt and are graduating from college with high debt loads," stated Heavner. "Universities are not doing enough to limit credit card marketing or to educate students about the danger of misusing credit cards."
The new report, "Graduating Into Debt," surveys the credit card marketing policies of 12 four-year public colleges and universities in Maryland. It also surveys the credit card or personal finance education provided by the schools to their students. The report reviews recent studies of credit card usage among college students and discusses legislative attempts to deal with credit card marketing to college students.
The survey found that four schools allow credit card vendors to set up tables on campus, with no substantive limits on solicitation: Frostburg, Morgan, University of Baltimore (UB) and University of Maryland at Baltimore (UMAB). Salisbury and Towson allow tables on campus, but limit credit card vendors to handing out applications, not accepting completed applications. Towson also requires credit card vendors to hand out credit education materials along with credit applications.
University of Maryland College Park (UMCP) allows marketing of the alumni association's affinity card at sporting events. Students report that they are actively solicited to complete credit card applications at these events and are offered "freebies" for signing up for a card. "UMCP's alumni association has a multi-million dollar contract with a credit card vendor to market its affinity card, giving it a financial incentive to allow this type of aggressive marketing," according to MCRC Executive Director Cheryl Hystad.
UMCP prohibits credit card marketing elsewhere on campus. However, students report that it is common to see unauthorized credit card vendors set up outside dining halls and other areas of campus. "Based on the blatant disregard of university policy by credit card vendors that occurs at the UMCP campus, it appears that the desire of credit card companies to tap into the college student market outweighs any concern about university policy or the welfare of the students," stated Hystad.
Four schools prohibit any credit card marketing to college students on their campuses: Bowie, Coppin, University of Maryland Baltimore County (UMBC) and University of Maryland Eastern Shore (UMES).
Additional findings of the report include:
• Two schools acknowledge selling students' personal information (including names, addresses and telephone numbers) to credit card companies. Towson University sells its student list to MBNA. Salisbury sells its student list to anyone who requests it.
• At least three schools allow credit card applications to be inserted in bookstore bags: Frostburg, St. Mary's and the University of Baltimore.
• All of the schools, except for UMCP, provide some form of personal financial education for students However, many of the programs are offered only occasionally, most are not mandatory, and none are credit classes.
• UMCP offers no credit card education to students.
• Four schools (Bowie, Frostburg, Salisbury, and Towson) provide money management, personal finance or credit card education as part of freshman orientation.
The combination of aggressive credit card marketing and lack of education about credit has led many students into financial difficulty prior to college graduation. Credit card issuers have slick marketing campaigns aimed directly at college students encouraging them to obtain and use credit cards, regardless of whether they can afford it. Students are encouraged by credit card companies to purchase small items like pizza and CD's with their credit card. "If students follow the advice of credit card companies, they will still be paying for all that pizza they bought in college when they are 30 years old," stated Heavner.
The groups urged the following reforms:
• Colleges and universities in Maryland should establish specific written policies with the input of students, parents and administrators on credit card marketing to students.
• Selling of student lists to commercial entities without specific permission of students should be prohibited.
• Credit card marketing tables should not be allowed on campus. If schools do allow tables, marketing tactics such as giving away "freebies" to students who apply for cards should be prohibited.
• If credit card tabling is allowed, credit card vendors should be prohibited from taking applications from students on the spot.
• Allowing student groups to sponsor credit card companies should be prohibited.
• Credit card companies should act responsibly and set reasonable credit limits for college students, so that students will be less likely to be overwhelmed with high credit card balances.
• Universities should not allow bookstores to include credit card inserts in shopping bags. If a university does allow book bag inserts, it should require the bookstore to also include an educational brochure about credit card use.
• Colleges and universities should provide credit card education as a required part of freshman orientation.
• Personal finance education should be a graduation requirement for all Maryland high school students.
• Congress should enact a national interest rate cap for credit cards, require higher minimum payments, require disclosure of the length of time it will take to pay off the account if only the minimum payment is made, place limits on late fee and penalty interest rates, and prohibit penalty interest rates for late payments to other creditors.
"As a society, we need to ask ourselves if we want our young adults to start out their life burdened by credit card debt," stated Cheryl Hystad. "If not, we need to take steps to assure that credit card marketing to college students is limited, that credit card terms are reasonable and that students have the knowledge to use credit wisely and responsibly."
