While college students and young graduates seem to be struggling to pay up the high card debts, universities and their alumni seem to be literally queuing up in the banks. As per the reports released by the Federal Reserve Board lately, financial institutions seem to have paid American colleges as well as the alumni more than $83 million as a marketing strategy for credit cards.
It has been a practice for many decades now, wherein card companies pay colleges huge sums in order to gather student information such as their names and addresses and details of the alumni as well. This information is used to market their cards on campus and offering cards with the university mascot or a campus scenario on it.
As per the report, a subsidiary of the Bank of America paid approximately around $3.2 million to the Alumni Association of the University of Illinois. There is information regarding at least more than around 1,000 agreements made between the card companies as well as the colleges along with their affiliated groups and this information is held by the reports by the Federal Reserve. It has also launched databases online with search options, wherein more information with regard to the agreement terms could be obtained.
As per the Credit Card Accountability Responsibility and Disclosure Act, 2009, it is mandatory for card companies to provide the Federal Reserve with proper information regarding the payment agreements made with the schools and also the ones who boost the alumni groups.
The subsidiary of the Bank of America that was responsible for the payment to the Illinois alumni group (FIA card services) had paid a sum of around $68,000 to the Washington University, as well as a sum of around $43,400 to the Missouri State University (foundation affiliated to it), as well as a sum of around $84,000 to the St.Louis University, and around $611,970 to the Alumni Association of the University of Missouri.
While the U.S. Bank had paid a sum of around $25,000 last year to each of the alumni groups, Missouri University of Science and Technology as well as the Northwest Missouri State University. Chase Bank had paid a sum of $575,000 to the alumni group from Southern Illinois University, Carbondale.
The card companies make these huge payments and manage to access all the student information such as mailing lists of both the students as well as the alumni. This is a convenient mode to peddle their cards on the college campuses at the cost of the struggling students.