It's not just pizza, beer and $100 textbooks that are getting college students into credit card trouble. Their own universities have a hand in enticing some of them to take on high-interest debt.
Dozens of universities across the country, including the University of South Florida and Florida State University, are raking in millions of dollars from marketing deals with credit card issuers. The banks get student and alumni mailing lists, prime campus locations to hawk cards on game day and the use of university logos and mascots such as Chief Osceola on their cards.
The promotion of debt on campus is one reason many college students graduate with a load of debt. In its "Generation Debt" study last year, the research group Demos found the average college senior has six credit cards and an average balance of just more than $3,200. Another study by student lender Nellie Mae found 92 percent of graduate students have credit cards, with an average balance of $8,612.
"Universities should not be in the role of encouraging students to run up debt so colleges could make money," said Tampa lawyer Terry Smiljanich, founder of the Consumer Warning Network, which put FSU's contract with Bank of America on its Web site. "That seems totally contrary to what a university should be." He said "students believe they can trust their university and think if this has the official endorsement from the university, it must be the best card for them."
The group's complaints have attracted the attention of Florida Attorney General Bill McCollum and New York Attorney General Andrew Cuomo, who say they are reviewing the situation.
"Our office is aware of the concerns surrounding the issue of credit card deals between banks and universities, specifically FSU and Bank of America, and we have received some initial information which we are in the process of reviewing," McCollum's spokesman said.
A lot of money is at stake. Bank of America pays USF's alumni association a minimum of $4.1-million over the seven years of its contract, providing the group with 26 percent of its revenue. Seminole Boosters will collect $10.7-million over seven years.
The University of Florida's alumni and athletic associations have a $10-million, 10-year credit card deal with Chase Bank, but it specifically prohibits marketing to students. On football game days, Chase sets up a table outside the alumni side of the stadium. Although students can sign up on their own, Chase can't solicit them for its Gator-branded card.
"We just didn't feel like it was an appropriate thing to do," UF spokesman Stephen Orlando said.
A university-endorsed logo card is not the only option for a college student. Student names and addresses are public information under the Florida Sunshine Law and any business can buy a mailing list; it costs just $50 at USF. Card issuers who aren't allowed to set up tables on campus entice students off campus with fliers offering free food for filling out credit applications.
In fact, the ubiquity of credit card offers is a reason some universities don't see a problem with signing marketing agreements.
"Students already have credit cards when they get to campus," said John Harper, executive director of the USF Alumni Association. "They are being solicited by numerous financial institutions."
Florida State provided a statement saying students who choose its card select it "over the hundreds of other credit card offers they receive every year from other sponsoring organizations ... Many students and alumni want to show their pride and school spirit with an FSU credit card."
Harper notes that USF's marketing deal at least gives the university a say in how students are solicited. "We have to approve every piece that goes out," he said.
But some USF students worry that the deluge of credit offers could be dangerous.
"Not all 18-year-olds are mature and responsible enough to handle a credit card," said senior Chris Talley, 24.
Freshman Amanda Adrion, 18, said she knows she's not ready. "Debt is something I want to stay out of," she said.
Graduate student C.J. Gerber, 46, suggested requiring students to take a one- or two-hour class on credit before giving them a card. "They require students to do things like take shots and have physicals, so why not?" he asked.
"Too many credit cards aren't good for you," said Tyrone Williams, 28, a USF junior who says he owes more than $1,000 on his Visa card. He said he won't be applying for a logo card. "I've got enough debt as it is."
Bank of America says student delinquency rates are in line with those of other card holders.
Spokeswoman Betty Riess said students only account for 2 percent of its university logo cards, which she says are primarily aimed at adult fans. Riess said the bank rejects half the students who apply for a card and starts students out with a $500 credit limit. It provides credit education through brochures, occasional campus seminars and a Web site (studentmoneyskills.bankofamerica.com).
FSU has its own educational program, including a video, Avoiding the Credit Card Monster. "We believe it is fundamental to a good college education for our students to learn how to manage their personal finances, including credit cards," the university said.
USF alumna Sherrie Williams, who has a Bulls-branded Visa, says "regardless of the source of the credit, many students will get in over their heads as a function of youth. It doesn't seem fair to blame the universities."
Whether credit cards are beneficial or detrimental depends on what students do with them, said Greg McBride, senior financial analyst for Bankrate.com in North Palm Beach.
"If you can establish the discipline of using credit responsibly and using it to your advantage, that is a skill that will pay dividends for years to come," he said. "The flip side — the mistakes you make in the early years of your financial life — can have ramifications that last a long time as well."
Helen Huntley can be reached at firstname.lastname@example.org or (727) 893-8230.