Colleges confront on-campus creditors

Card issuers meet resistance in once-fertile market

Max Vest is a college administrator, but sometimes finds himself playing the role of cop in booting credit-card solicitors from the University of Richmond campus in Virginia.

Mr. Vest, director of student affairs at the 4,000-student school, says unauthorized vendors often make up names of people who supposedly have let them visit campus. One solicitor even produced an authorization letter drawn up on bogus university stationery.

For the record, the University of Richmond has barred all but one credit-card issuer from soliciting students on campus. It's not alone: credit researcher Robert Manning estimates that 1,500 of the nation's approximately 3,200 four-year colleges have banned or restricted on-campus credit-card solicitations.

The tougher stance comes amid growing concerns that too many students are getting into too much financial trouble with credit cards.

"It just got so easy," to obtain credit cards, says Melissa Fitch. She enrolled at Illinois State University in the fall of 1999, planning to complete her studies for a degree in elementary education. Then she walked through the student union building, where she got a credit card from marketers who were giving away T-shirts and candy bars to students who applied for cards.

Ms. Fitch got three more credit cards and quickly found herself $3,500 in debt. Instead of looking forward to graduation this spring, she dropped out of school, moved back to her hometown of Champaign, Ill., and now works at a day-care center to pay off her bills.

During much of the '90s, campuses were fertile grounds for credit-card companies, which saw college students as willing recruits. Though many students had little to show in the way of a credit rating or bank accounts, they had potential to earn money and pay off debts once they graduated. So issuers would hire contractors - even student groups - to set up display tables and hawk cards at student unions and events. Some colleges balked; most just charged rent.

The practice, known as "tabling," has perhaps fallen victim to its own success, as tales emerged of students collecting fistfuls of cards and debts they couldn't possibly repay.

This appears to have caught the attention of administrators, who have begun to connect the dots between debts, drop-outs, and unpaid student loans.

Small, private schools have led the charge against tabling, says Mr. Manning, a sociologist at the University of Houston and author of the new book "Credit Card Nation: The Consequences of America's Addiction to Credit."

But the largest 250 or so schools generally still permit solicitations, he says, In many cases, big colleges have signed exclusivity contracts that permit only one credit-card company on campus. In return, they earn fees that can rise with cardholders debt levels.

Card issuers have said little about any tabling backlash.

"We are aware of greater restrictions imposed by some colleges...," says Gina Doynow, a vice president at Citibank, one of the nation's biggest card issuers. When it bumps into a reluctant college, Doynow says Citibank "directs its efforts to near-campus activities and other student groups."

Card companies are responding to concerns over student debt. Citibank sponsors a website (credit-ed.citibank.com), where students can get answers to frequently asked personal finance questions. MasterCard International makes its Money Talks brochures on money management available during college freshman orientations. The booklet is aimed at starting a dialogue between parents and students and can be ordered free from MasterCard at 800-821-6176.

"You can't manage credit if you can't manage money," says MasterCard spokeswoman Catherine Cummings.

Not that some students don't show some savvy. Ms. Cummings notes that about 58 percent of college students pay off their entire credit card bill each month, compared with just 50 percent for nonstudents.

All this talk of banning credit-card issuers from campuses strikes Eric Weil as slightly hypocritical. The managing partner of Student Monitor, a New Jersey company that researches college-student spending patterns, he chastises colleges for ousting credit-card marketers as they're raising tuitions at levels well above the rate of inflation.

His company, which counts major credit-card companies as clients, estimates that 45 percent of college graduates will have amassed tuition debts averaging $18,363.

That's more than eight times the $2,200 in credit-card debt that Nellie Mae, which makes student loans, estimates that one-half of students will owe upon graduation.

There's good debt and there's bad debt, responds former Illinois State student Fitch.

And there's "something that students can take with them" from tuition debt, she says. "An education."

(c) Copyright 2001. The Christian Science Publishing Society

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