Higher Ed, Banks and Credit Card Companies

Great commentary from Kevin Carey, which I've linked to just below, along with the NY Times article (below the fold) which spawned the story. I've always been troubled by the relationship with banks on our campus. The college recently changed banks after negotiating better terms. Apparently these terms didn't consider students - the ATM machine on campus still charges a fee for withdrawals from other banks. Most of the withdrawals come from - you guessed it - students. I wonder why we didn't negotiate a deal more advantageous to our students - consider for example that all ATM withdrawals at Wawa (the convenience store) are free. How did this happen? Wawa negotiated a deal with the bank.

The other troubling college-bank relationship happens at our bookstore. Every semester, students wait in line to buy books for their classes. Upon paying for their purchases, they are handed a bag with their books and supplies in it. So far so good. When they open the bag is when the trouble starts. Each bags has a flashy promtional brochure inside encouraging students to apply for a credit card - often their first. This troubling practice has resulted in students completing college with credit card debt - often on top of student loans. Credit card debt before they've even had their first job interview. Next chance you get take a walk over to the nearest college bookstore and see what's in the bag - and while you're at it find an ATM.
Brainstorm: Too Much Information?

Higher education policy disputes in Washington, DC are generally about information. As a rule, the federal government doesn’t (and shouldn’t) regulate how universities conduct their academic affairs. So most new federal initiatives consist of lawmakers asking questions: How many of your students graduate? How much money do you spend? On what? And so on. For the DC higher education lobby, the standard response to proposed new information reporting requirements is to (A) Loudly declare that they’re a bad idea, and then (B) Go back to the office and try to come up with a justification for (A).

Such justifications come in three flavors. First, that American colleges and universities operate under a sacred principal of autonomy that dates back to (and possibly precedes) the founding of the Republic. This one hasn’t been working very well lately, mostly because it’s not true, but also because it begs the question of what, exactly, universities have to hide. The second argument is that new reporting requirements represent a terribly onerous administrative burden—because higher education institutions are apparently the only organizations in all the world that have been unable to use information technology to realize vast increases in the efficiency of gathering, storing, and processing information. Third, colleges argue that sending more information to the feds would constitute a grave threat to student privacy, a kind of creeping Big Brotherism that must be opposed at all costs. This one has been gaining traction lately, particularly given the current administration’s attitudes towards civil liberties.

Then I pick up the New York Times and read that colleges are perfectly willing to disclose information about individual students to large private corporations, in exchange for money, so those corporations can sell students high-interest credit cards and give them a head start on pursuing the American dream of over-consumption and ruinous debt. Because while the U.S. Department of Education (a public agency accountable to elected officials which operates under strict federal privacy rules) can’t be trusted, Bank of America can. It all depends, as it usually does, on whose interests are being served.

The Debt Trap - Unspoken Link Between Credit Cards and Colleges - NYTimes.com

Bank of America’s relationship with the university extends well beyond marketing at sports events. The bank has an $8.4 million, seven-year contract with Michigan State giving it access to students’ names and addresses and use of the university’s logo. The more students who take the banks’ credit cards, the more money the university gets. Under certain circumstances, Michigan State even stands to receive more money if students carry a balance on these cards.

Hundreds of colleges have contracts with lenders. But at a time of rising concern about student debt — and overall consumer debt — the arrangements have sounded alarm bells, and some student groups are starting to push back.