College Credit

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.

But even if they are showing up with cards in their wallets, it's a safe bet that they haven't been taught how to handle them. After all, it's likely that their parents are in debt as well. According to Harvey Warren's group, the National Consumer Council, the average U.S. household has ten credit cards, with an average interest rate of 18.9 percent. The average total balance is around $8,000, and almost half the households in America report having a difficult time making their minimum payments. In 1998, personal bankruptcies hit an all-time high of 1.4 million, although that number has declined slightly in recent years.

"Credit is not magic, and kids need to learn that," says Danette Tidwell, program manager for the Texas Jumpstart Coalition, a Dallas-based nonprofit that advocates more financial education in Texas schools. Tidwell cites a 1997 national study by lender Fannie Mae showing that only 5 percent of high school seniors scored a C or better in a personal finance assessment quiz.

In addition to learning about credit cards, she says, Texas children need to be taught the basics of saving and checking accounts, insurance and investing. The coalition, which works to put schools in touch with the numerous free or low-cost financial literacy programs offered by banks and credit unions, is backing a bill in the Texas legislature that will make some form of financial education mandatory in Texas schools.

Not that Tidwell expects a warm reception among educators. Teachers in Texas are pressured to ensure their students pass the Texas Assessment of Knowledge and Skills test, says Tidwell, and credit card lingo isn't on the exam.

"If they would consider putting things on the test relative to financial education, it would make the test more relevant," she offers, stressing that a teacher doesn't have to revamp her entire lesson plan to squeeze in a little instruction on dollars and cents.

"A course can be taught in pieces of 30 minutes," she says. "You can find so many resources out there already, you don't have to reinvent the wheel."

MasterCard, for example, recently teamed up with the College Parents of America organization to distribute 175,000 brochures over the past four years to college students and their parents. While the colorful materials come with MasterCard's logo on them, a card application isn't included.

But, Tidwell says, that information is bound to be biased. "They describe the credit card as if it were a debit card -- you can pay for your housing, your books" with the card, says Tidwell. "I think, 'Oh, dear, that sounds too easy.' Students need to learn about budgeting."

It's also important to understand that, contrary to popular belief, credit cards are not the best way to establish credit history.

"I think one main reason that college kids obtain credit cards, aside from prestige, is they know how important credit is," says Rudy Cavazos of Houston's Money Management International, a nonprofit credit counseling service.

Cavazos has a weekly money matters segment on the Telemundo network and has spent years counseling college students in debt. He has seen countless young adults who believe that getting a credit card is the first step on the road to one day buying a house.