WASHINGTON – When university students sign up for credit cards through marketing campaigns on or near campuses,the gimmicks and gifts they receive vary from T-shirts to food to iPods.
But according to a report released Thursday based on an unscientific,informal survey,they often get something else from such marketing tactics: a debt burden they didn't expect or understand.
“Campus credit card marketing is simply out of control,” said Ed Mierzwinski,consumer program director for the U.S. Public Interest Research Groups,or PIRG,which conducted the survey at 40 colleges and universities in 14 states.
PIRG members of campus chapters approached students at student unions and other campus locations to ask them about their credit card experiences. The Ford Foundation funded the research.
As the U.S. House of Representatives considers increasing credit card consumers' protection from fine-print tricks of the trade,the U.S. PIRG and its student counterparts are urging university presidents to limit the collegiate version of those tricks by credit card marketers.
Of the 1,584 students questioned,three-fourths said they had stopped at a credit card marketing table on campus,and one-third of those were offered gifts. Four in five reported receiving mail solicitations for cards,at an average of nearly five solicitations a month,and the same number said they would support some level of restriction on campus marketing.
“When you first move in,they plague you with different ads,different T-shirts,different food,” said Kate Christobek,student body president at Ohio State University,during a conference call about the report's release. OSU did not take part in the survey.
Ohio Attorney General Marc Dann,who participated in the call,said such practices are deceptive when marketers don't clearly convey the requirements of the trade-off,as was the case in a lawsuit he filed about a “free” sandwich giveaway in exchange for card applications at one campus.
“We think disclosure is at the heart of good business practices and legal business practices,” he said.
When students seeking free pizza or shirts apply for cards,”They don't realize after that point what kind of hoops they're going to have to jump through” to navigate or get out of the agreement,Christobek said.
Two-thirds of the survey participants said they had at least one credit card,and one-quarter said they had incurred at least one late fee. Of those with a card,one in three respondents said they carried a balance from month to month.
Three-fourths of undergraduate students had credit cards in 2004,with an average outstanding balance of $2,169,according to a study by the student loan company Nellie Mae. Nearly nine in 10 graduate students had at least one card in 2006,with an average outstanding balance of $8,612. Both statistics are the most recent available from Nellie Mae.
Increasingly,students are relying on credit cards to help them attend school,Mierzwinski said. One in four survey participants said they used credit cards to pay tuition. Creditors' desire to draw students in early,combined with the possibility of those large debts,makes students a key target for credit companies.
Some companies also offer university-branded cards,Mierzwinski said,though he did not know the number of institutions that have such cards.
Discover does not offer the so-called “affinity cards” tied to universities and does not advertise or employ other companies to advertise for it on college campuses,spokesman Matt Towson said. Mastercard doesn't get involved at the corporate level with on-campus marketing practices,a topic better addressed by card-issuing banks,spokesman Chris Monteiro said in a voice-mail message. A Visa employee who refused to identify herself also referred calls to bank representatives.
To educate students about the pitfalls of credit card use,Mierzwinski's organization has set up www.truthaboutcredit.org. The nonprofit CollegeBoard.com also offers tips on its Web site,including an explanation of the extra fees that students may face and rules for good credit management.