Last year I went through the trouble of “Opting-Out” of all of my credit cards marketing and information sharing policies. I also did the same with the three major credit bureaus to avoid unwanted pre-screened offers. And for a while, it worked. I stopped getting a ton of “You’re Pre-Approved” or “Act Now” spam mail and did not see any more unwanted screening blips on my credit report. But apparently I did not cover all the bases.
As I was flipping through the July 28th issue of BusinessWeek, I came across an article about the “College Credit-Card Hustle.” It explained how colleges found a source of revenue in information sharing. Credit card companies have been buying college’s vast data sources and spamming the college students with enticing offers.
Surprise, surprise…
I would have never thought that my college would sell me out. But sure as hell, when I went to check my mail, I found a credit card offer. Yet another from Bank of America (whom I already have a card with and opted-out of), but with the CUNY Baruch College logo and alumni association tag on the front. I guess they found a loophole…
This is not a joke. It is actually kind of sad. I chose to go to Baruch College and get a degree in Finance to learn how to manage money. Not to be hastled by it. During my term, I had the pleasure of learning about all the crappy things that credit card company’s do (on and off campus). As a Finance major I also had the opportunity to learn how profitable (in present and future value terms) college students are to credit card companies. And because of this, companies go to great lengths to sign up undergraduates.
A little peeved
My gripe is that neither the CUNY Baruch College, nor the Alumni Association ever disclosed to me that my information could be used in this manner. I feel violated. And in my opinion, they’re lucky that they don’t have a class action lawsuit on their hands.
Colleges are education institutions - not a private business. I gave them my personal information with confidence that it was protected and would not be abused in this manner. And it does not seem right that I have a hard time getting access to my own college records, but for a couple million dollars my college gives Bank of America special access to all of my supposedly “confidential” information with permission to send me offers.
School pride? Not any more…
To add insult to injury, the credit card offer explains that if I sign up for this card my purchases will help support the alumni association. What?! How about the alumni association give me a call for a donation rather than going behind my back and selling my personal information.
What makes them think that it is okay to sell students information? If the college was selling their administrators or staff’s personal information, I am sure there would be a strike or something. They would not want their personal information given out, no matter what cost. So how is that any different from a student or alumni? But since students are the target and are profitable, the college is willing to make a deal?
Under lock and key
BusinessWeek had to use the Freedom of Information Act to get copies of the contracts from colleges because they would not readily release them. Why is that? What do they have to hide? I’ll tell you what:
Colleges and credit card companies have been under fire because they have allowed credit card sales people to haggle students on campus. They offer “free” stuff and get students to sign up without seeing or explaining the complete terms. Colleges have plenty of incentive to allow it because when a student signs up, the college makes money. When the student uses the card, the college makes more money.
Colleges sign up with the highest bidder for student information, rather than with a company that will work to benefit the students. They may try to negotiate to limit the number of times that the credit card company can mail offers to students and alumni per year, but they don’t negotiate flexibility of terms or interest rates.
The argument is that credit cards benefit students because they provide access to money for emergency expenses and such… but you really have to ask yourself: who is benefiting more? Students are encouraged to get into more debt than they already have from college tuition and loans, while the college and credit card company racks up revenue from student spending.
Most students don’t understand how credit cards work or the potential consequences of missing a payment. This makes them more prone to incur late fees, higher interest rates and ultimately changes in terms that they don’t understand. If you don’t believe me, ask a non-financial major how daily compounding is calculated. Or how to calculate a minimum payment. By signing the dotted line, the college and credit card company claims that students are acknowledging that they understand the terms (even though they are not given the complete terms until they get the card in the mail), but really they don’t.
There really is no win-all solution to this. And yes, I understand that if a someone wants a credit card, they will get one regardless if it was offered by the college or not. But is it ethical or legal for colleges to go ahead and sell their students information?
I guess colleges and credit card companies figure that parents will bail their kids out if they spend too much and get themselves into trouble. But what happens if the parents cannot? I guess they’ll just have to learn how credit cards work the hard way.
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Erm… yeah, a college *is* a private business. I was amazed when I saw how much some of these schools get for selling the info, though.
My school never had any people trolling the campus signing up students for credit cards. At least, not that I saw, anyway, as I lived off campus, and generally stayed off campus as much as possible. That didn’t stop me though, Capital One sent me an offer, I wrangled me a $300 credit limit that I maxed in about a week (most of which was furnishings and necessities), and here I am 3 years later with a $7300 credit line, a $7300+ balance, and two months or so since I’ve made a full minimum payment. And no degree.
I haven’t received a credit card offer that’s associated with my old school and I hope to never get one. I once got a letter from an insurance company offering a discounted group rate courtesy of our alumni association. I thought that was cool but a credit card offer will be an entirely different story.
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Jake:
Seems like you know what I am talking about. And unfortunately you’re not the only one that got into a bit of debt. But you seem better for it.
The problem remains that most people (no matter what age or education level) don’t know how to control or pay off their debt.
Oh and yeah, technically private colleges *are* private businesses. Or, they are at least run that way. But they are still education institutions. And they should carry higher ethical standards. Especially since they preach ethics so much nowadays.
Frugalchick:
I hope your school is better than mine and you never have to worry about getting credit card spam from them. I’ve never heard of the insurance discount, but I don’t think I’d welcome that either because that still means the college sold my info.
PF Buzz:
Thanks! Will check it soon!
Way too many grads are entering the job market with a ton of maxed-out credit cards, when part-time work, a debit card and even a traditional student loan would have sufficed. Good thread on the topic here:
http://digits.hrblock.com/ssDigits/digits.php?rType=1&sPath=2441&sNode=2441&uId=294
[...] Twenties Money Magazine presents My College Sold Me Out. [...]
[...] Twenties Money Magazine presents My College Sold Me Out. [...]
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[...] “My college sold me out” at Twenties Money Mag. Explains how some colleges profit from allowing credit card marketers access to their students. [...]
Whoa! There is a federal law that protects students’ privacy. At the Great Desert University, it is so stringently enforced that we are not allowed to post students’ grades on our office doors, EVEN USING THE LAST FOUR DIGITS of their Social Security numbers. We are not allowed to have students’ score each others’ quizzes in class — that violates the law. We are not allowed to discuss students’ performance with their parents, even if the students are minors.
There’s a good chance the college or its alumni association violated the law in providing information about you to credit card vendors. If I were you, I would quietly inform the U.S. Attorney General’s office. I also would send a formal complaint to the college president’s office and to my state attorney general. Send a copy to the head development officer of your college’s alumni association. That is just inexcusable!
[...] stuff here. Kristin at Twenties Money sent my blood pressure through the ceiling by reporting that SUNY sold her private information to credit card vendors, a stunt that probably violates FERPA, the federal privacy act that protects students. Economic [...]
[...] Money talks about how her university sold her information in My College Sold Me Out posted at Twenties [...]
My college sold me out too. The alumni association sold names addresses and phone numbers in the name of raising money. There was a huge backlash and we got the president fired. Its bad enough I get spam from my own college that failed to help me at all after graduating, now the credit card spam is coming in faster than ever. Coming to an email address I thought was confidential.