Colleges Get Kickbacks When Credit Cards Hook Students

We've written before that as much as we'd like to believe it, colleges may not be setting us up to succeed financially. But are students actually being targeted by their own schools? It may not come as a shock to anyone who has been on a college campus recently, but they are fertile breeding grounds for selling students on credit cards. What you might find more troubling than a few AmEx and Visa tables in the student union are alumni and school administrators taking kickbacks for promoting the plastic on campus — and benefiting further whenever students make a purchase.

According to an article by the Huffington Post Investigative Fund, some of the nation's biggest universities are making bank off selling their student and alumni address lists to credit card companies. Some companies are granted special access to school events, and many offer incentives to the schools whenever a purchase is made using one of the cards. The agreements are often quite secretive, since Obama's bill to curb college-based credit card marketing — the Credit Card Accountability, Responsibility and Disclosure Act of 2009 — passed last year, but the legislation does not specifically prohibit this type of strangely predatory partnership. In fact, because there's no oversight for these types of agreements, it's difficult to say exactly how many institutions of higher education are participating.

The problem isn't just the one-time royalty colleges earn (typically $1 for every credit card account kept open for 90 days), and perhaps you could even argue that a .4 percent kickback on every purchase wouldn't add up very fast (though you don't have to know more than basic multiplication to see how a campus of 20,000 students could lend itself to some pretty sizable profits). But some schools make more money the longer the cards and kept and used: $3 for accounts open longer than 90 days, and some alumni organizations can earn up to $60 per card if they engage in specific marketing campaigns.

The Credit Card Accountability, Responsibility and Disclosure Act has had some positive effects. For example, banks are no longer allowed to hand out free merchandise or promotional offers just for signing up for a credit card. But that hasn't stopped colleges from finding loopholes, like the fact that banks are still allowed on campus and often given special access to students if the price is right.

Colleges defend the practice, saying the surplus in income could help with budget shortfalls. But should we really have to ask universities, those entrusted with the education and well-being of future generations, to stop treating students' data like a telemarketer would?

Photo credit: Andres Rueda