Editorial: Card companies on campus exploit students

For many students, being in debt from student loans after college is inevitable. On many college campuses, the presence of credit card companies marketing their high-interest cards only exacerbates the national issue of young adults with crushing debt.

Twenty-four Pennsylvania colleges have contracts with credit card companies, allowing the companies to market their cards on campus. These companies offer high-interest credit cards to students, giving the universities a cut of the royalties and fees that are earned from the card. Credit card companies offer these high-interest plans to customers purchasing credit cards for the first time because of the risk these customers pose by not meeting monthly payments.

Although the practice of marketing credit cards to students is declining, it still offers students a way to potentially bury themselves in debt. It is irresponsible for credit card companies to target and exploit students and even more irresponsible for the universities to allow the companies to do so. If students are to sign up for a credit card, they should be able to work with the credit card company in order to lower the interest rate gradually or use their parents’ credit as a base for their interest rates. 

In 2011, Penn State earned more than $2.7 million through a deal with Bank of America. The university is contractually obligated to allow Bank of America to market credit cards to students and alumni in return for a portion of the fees and royalties. For every student or alumnus who signs up for a credit card, the Penn State Alumni Association receives between $5 and $10. Additionally, the association receives a 1 percent royalty on all purchases made with the credit card.

The amount of money that credit card companies pay to universities has been steadily declining since 2009. Additionally, the number of universities that have signed contracts with banks has also declined. Both these changes are due, in part, to the Card Act of 2009. 

This legislation established rules for transparency and fair practices for credit card companies. The details of the relationships between both the company and the university and the company and the student are now open and accessible. The law has also stopped credit card companies from giving away items to students for filling out a credit card application. It’s clear that it’s time to strengthen the law. 

Credit cards are already easy enough to obtain without the presence of card companies on college campuses. It is unfair for companies to target college students to apply for high-interest credit cards when they most likely do not have the means to pay off their bills and do not even know how to use a credit card appropriately. If a university allows credit card companies to market on campus, it should be required to work as a mediator between the student and the company in order to keep interest rates low. 

If universities are to have a hand in marketing credit cards to students, then they should have a hand in ensuring that students use them responsibly.