In accordance with the Credit Card Accountability Responsibility and Disclosure Act of 2009, which requires credit card companies to share information about their contracts with colleges and universities to market to alumni and students, the Federal Reserve Board released a report last week offering details on 1,044 contracts involving 17 credit card companies.
Although the practice of partnering with credit card companies is valuable in raising revenue for colleges, it must stop because it helps further the overwhelming debt many college students acquire from not only tuition, but also credit card debt.
According to the report, a total of $84 million was paid to colleges, their alumni organizations and their foundations last year with a total of 2 million accounts open by the end of 2009.
A study released last year by Sallie Mae, a college financing company, found an average of $3,173 in credit card debt for all college students and $4,138 for seniors with at least one card in 2008. Half of all college students had four or more cards.
These numbers have likely grown as a result of the economic recession.
College can be very expensive, but a well-paying career can often negate the financial cost.
The Department of Education’s National Postsecondary Student Aid Study, which is conducted every four years, found that between 2007 and 2008, students owed a median debt of $19,999 from loans.
Additional debt from credit cards may have a profound effect on the results of a college education. The debt can force a graduate to continue working a low- paying job just to make payments and can negatively affect credit.
A bad credit score can do more than just limit the ability to obtain lines of credit, potentially costing one a potential job, as many employers run credit checks on prospective employees.
Beyond this, the contracts may affect students who choose not to do business with the credit card companies.
According to the Chronicle of Higher Education, 17 of the credit card contracts studied required colleges to provide personal information on students. Even worse, some credit card companies paid extra money to colleges when students carried a balance on their credit cards.
First and foremost, postsecondary institutions are places of academic enlightenment and personal enrichment. While it comes at a significant cost, they must reconsider a commercial path that sees students as dollar signs instead of hungry minds.
There are endless forms of funding, and although credit card funds can raise several million dollars, it’s not worth selling out students and their future.