College Credit

At Rice University the student union staff had to rewrite policy in the fall of 1998 after credit card vendors started throwing T-shirts at students and yelling at them to stop by their booths.

"We can't allow vendors to harass students," says Boyd Beckwith, assistant dean for the student center. "The students must approach the table and the vendors must speak in normal, conversational voices." Beckwith says students have access to booths that offer not only credit cards but cell phones, posters and crafts as well.

"We even had a group selling mopeds, because that's the hot new thing this year," says Beckwith.

The state of California is attempting to one-up Rice's policy against aggressive vendors. In 2001 the state legislature passed assemblyman Paul Koretz's bill that asks (but does not require) all public and private two-year and four-year colleges to prohibit inducements like candy and T-shirts when recruiting collegiate cardholders. It also asks that colleges have mandatory financial education during orientation. A few other states are considering similar legislation, but Texas is not one of them.

At the federal level, Congresswoman Louise Slaughter, a Democrat from New York, has introduced the College Student Credit Card Protection Act twice since 1999. The bill, which would put a cap on credit card limits for college students, has yet to pass. The credit card industry, says Manning, is simply too powerful.

"Now, for the first time, we're seeing them going after high school students," says Manning, who adds that debit cards with overdraft protection are being marketed to kids before they even go to the prom.

"The question is," he says, "how low are they willing to go?"

If you ask MBNA spokesperson Jim Donahue, Robert Manning is nothing more than a Cassandra from Greek tragedy, spouting proclamations of doom for college kids who continue to use plastic at today's rate.

"I'm not sure what Mr. Manning's intentions are, but I'm sure they're noble," says Donahue. "There are plenty of anecdotes [of college students in debt], but there's quite a bit of statistical information that people choose to ignore."

According to Donahue, MBNA has affinity card relationships with about 700 colleges and universities across the country, including Rice University. Those relationships have produced about three million accounts, and only a third of those are student-owned.

"At MBNA, we set very specific limits; we don't accept every student who applies for a card," he says, declining to divulge how many are turned down. Most students who do receive cards get limits of $500 to $1,000, and MBNA's studies show that the average balance for most college kids is only $552.

MBNA's studies show that "people 18 to 23 who are not in college have a balance that is three times higher," says Donahue.

The spokesperson also says that the majority of debt students shoulder when they graduate is in the form of loans, not credit cards, "but student loans are somehow seen as more virtuous." Credit cards serve a useful purpose on today's campus, he argues. Students use them to buy books, meals and plane tickets home.

To those who think MBNA is taking advantage of a population that is underinformed about credit, Donahue says his company has an educational Web site and offers to run workshops on college campuses about proper usage of a credit card. MBNA, says Donahue, is helping young adults get used to the way the economy operates today.

"The world's changed from 20 years ago," says Donahue. "Credit cards are a part of today's real world. They are ubiquitous, and if they haven't already, they will soon replace cash. College is the time to learn about the real world."

Eric Johnson, vice president of resource development at Rice, oversees Rice's department of alumni affairs. He declined to say how much money Rice acquires from its affinity card relationship with MBNA, saying only that the money goes to special projects, such as updating the alumni Web site. Rice was careful when mapping out its relationship with the bank, says Johnson, requesting that students and alumni be solicited only through direct mail, not by e-mail or telephone.

Johnson says he understands that parents might be upset to learn that their kids can acquire a card in their first few months on campus. But, he says, "I think it's up to the parents to decide whether the kid gets a credit card." Of course, MBNA applications don't require a parent's signature for students who are at least 18.

The University of Houston, which asks alumni and students to "reward your Cougar pride" by getting an affinity card, also would not divulge the amount of money it makes on its relationship with First USA, claiming the arrangement is proprietary information. Steve Hall, president of the university's alumni organization, says the card has been in existence since 1992 and less than a fourth of the cards belong to undergraduates.

"The money goes to educational and social programs," says Hall, "including over 80 scholarships a year."

Hall also argues that UH students are not typical college undergraduates, since the average age on campus is 26, not 18.

"The research I have seen shows that the overwhelming majority of students arrive with cards when they get to the university," he says.