Who would have ever imagined that the student credit cards can bring in revenues for universities? A few elite and prestigious universities in the nation are making money by trading the data of their alumni and also students with credit card lenders and giving the financial institutions privileged access during some events being held at school.
These schools and universities, in addition to the alumni associations, will receive payments as royalty and the amount being paid will increase as the students put their cards to use. In fact, this is so profitable that there are schools that receive an extra bonus when the student debt increases.
This agreement between the banks and the schools has come at the right time when people in their youth are borrowing money excessively. This has raised questions if this alliance between the banks and the colleges and schools is actually in the benefit of the students.
Representative Patrick Murphy from Pennsylvania, who was also a West Point US Military Academy`s former professor said, "The fact that schools are getting paid for students to rack up debt is a disgrace."
The Landmark credit card legislation that was approved by President Barack Obama a year ago restricted a few marketing strategies by the educational institutions, but is definitely did not have any impact on the affinity agreements, which is the agreement between the financial institutions and the schools and colleges.
The terms of these deals has been held a secret. However, one of the provision in this law necessitates the disclosure of the terms of the agreement signed between the banks and the colleges. Despite this, only a limited number of schools have disclosed this data and posted it online. It is not sure as to how many of the 2700 colleges in the country that have been in existence for about four years now have undertaken such agreements.
Bank of America leads the way
A leader in the credit card segment, Bank of America, has disclosed that it has such agreements with over seven hundred alumni associations and schools.
Close to 17 agreements obtained from alumni associations and schools clearly mention special access being given to these financial institutions to set up their counters during various school and college events. In all these contracts, there is clear mention of the colleges having to traded the details of their students such as their mobile numbers, addresses and names.