College Credit

"Instead of going to South Padre Island for spring break, now you go to Paris," says Manning of the spend-more-to-be-more mentality he says is spreading on college campuses. "It's called a gold card, right?"

Manning also suggests that the rising cost of college education has pushed some kids into believing a credit card is a must to finance their education -- or at least to pay for necessities like books.

"Credit card debts are being 'revolved' or paid off with federal student loans or even with private debt consolidating loans," he writes in Credit Card Nation. "For growing numbers of students, credit cards are becoming a savior for financing their educations -- especially in public schools. For others, the initial freedom offered by credit cards may become financial shackles by the end of their college career."

But schools take little notice of such problems, says Manning. Almost all universities, public and private, have taken advantage of affinity cards. Rice University, the University of Houston and Houston Baptist University all have them (although HBU does not market to students). Most colleges and universities work with the Delaware-based banks MBNA and First USA. The schools can choose how heavily the cards are marketed, from football games to unsolicited e-mails, telephone calls and direct mail. Although the amount gained by the school on each transaction is often less than 1 percent, the pennies add up quickly. It's not uncommon for a school or alumni association to pull in $750,000 or even $1 million a year in transactions, he says.

One of the worst offenders, claims Manning, is the University of Oklahoma, which has a ten-year, $13 million deal with First USA to market Visa cards to students, alumni and employees both around campus and at football games. In 1998, a junior at OU hung himself in his bedroom closet after panicking over the $10,000 he owed on 12 separate cards (which he managed to get despite the fact that he made just $5.15 an hour part-time at a department store). The student's mother has publicly blamed the credit card companies for aggressively marketing to her son, claiming that she continues to receive card applications addressed to him.

Affinity cards weren't always available to students. When they were first dreamed up in the late 1980s they were known as alumni cards, and graduates were the only people who could get them. But universities soon realized what a sweet deal they were getting, says Harvey Warren, president of the National Consumer Council. The nonprofit education and advocacy group in Washington, D.C., recently ran a series of public service announcements warning college students against amassing credit card debt.

"It kept spilling downhill," says Warren. "You follow the logic. If we do it for alumni, let's do it for seniors because they're going to be alumni soon and we can catch them before they get out. And as long as you're considering seniors, why not juniors -- they're going to be seniors. And sophomores need to buy books, and don't forget the poor freshman."

The argument that college kids are adults gets a laugh from Warren.

"What is the difference between a high school senior and a college freshman, except for geography and 60 days?" he asks. "In the drive to college they became financial wizards? It's absurd."

Chinh Nguyen, 24, a graduate of Cypress Falls High School in northwest Houston, says it was a table at a football game that persuaded him to get his Texas A&M affinity card. Currently a senior at A&M, Nguyen was raised to believe that credit cards were not necessities but privileges. But on that day outside the stadium, Nguyen saw the free T-shirts being handed out with each completed application. It's common practice to entice students to sign up with free gifts such as a bag of M&Ms, a Koozie or a mug.

"I don't think I was hog-tied into it, but I did want that T-shirt," he says. "It was an A&M shirt, and I hadn't done my laundry in a while."

Nguyen, who works 25 hours a week in addition to being a student, says he has been careful with his card. His balance is just under $2,000, and it doesn't worry him. He has used the card only for necessary purchases like books, and he doesn't take it with him when he goes out at night. His parents wish he didn't have a credit card -- they even offered to lend him money for books. But Nguyen says the card was his way of establishing independence.

"At the time," he says, "I was trying to get away from my parents' watching me."

Nguyen is the typical face of college credit card holders. Whereas 20 years ago it was rare for a student to have a card -- much less to carry a balance -- Nguyen says he is not unusual among his friends. He lives with three other guys, and they regularly receive applications in the mail.