Lawmakers, administrators consider students' credit
New state law would keep credit card promoters off-campus

By Justin Lange

Daily Egyptian, Carbondale, IL

Published Wednesday, September 24, 2008

Impending state legislation would prevent credit card companies from luring college students to stake their financial futures on a free sandwich.

In years past, credit card companies have implemented several promotional strategies, such as handing out free food and merchandise, to entice students to sign up for credit. In January 2009, State Treasurer Alexi Giannoulias along with State Sen. Donne Trotter, D-Chicago, and State Rep. Kevin Joyce, D-Worth, plan to introduce a bill to the Illinois General Assembly that would keep credit card promotions off campus.

"As college students head back to school, they're bombarded by credit card companies offering freebies if they sign up for a card," Giannoulias said in a press release. "These aggressive, and in some cases predatory, practices are often aimed at students, who have never had any serious financial obligations."

Scott Burnham, spokesman for Giannoulias, said the treasurer conceived the bill after he received calls from concerned parents and students, and learned about similar laws in other states.

The bill will be a combination of Tennessee's law against giveaways near college campus and Minnesota's law against universities releasing student personal information, Burnham said.

"By the time undergraduates reached their senior year, 56 percent of them had four or more credit cards with an overall balance of $3,000," Burnham said. "We took a look at every law in every state and cobbled together a bill which is the most comprehensive and by far the toughest that would be on the books at this point."

In the past, credit card companies have gotten around similar laws in other states, Burnham said. He said the bill would attempt to eliminate all loopholes that credit companies have used to work around those laws. One example of how credit card companies have gotten around such laws is by handing out coupons on campus that can be redeemed at locations off campus with the purchase of a card, Burnham said.

Several Carbondale businesses, including Jimmy John's, Quizno's, Wise Guys Pizza and Papa John's, have run promotions with credit companies in the past. Promotional gifts range from free sandwiches and pizzas to T-shirts and backpacks.

Quizno's manager Jonathan Bell said during the three years he has been in his position, the company has participated in four promotions giving free sandwiches to people who signed up for a Chase credit card. More than 600 students applied for cards during a three-day period.

Bell said Quizno's runs the promotions to advertise to incoming students, but does not agree with the credit company's practices.

"I hope they realize they can drop the credit cards. They don't have to keep them," Bell said. "They got students in here by saying nothing about being a credit card. People thought they could just walk in and get a free sub not realizing they had to actually sign up for a credit card."

Sarah Dubach, a shift manager at Papa John's in Carbondale, said she has seen Chase run five promotions at her work during the last three years. She said she and other managers had grown tired of the promotional practices the credit companies implement.

"(Credit card companies) are straining our relationship with the university because they don't follow the rules established in the agreement," Dubach said.

Some students expressed concern for their fellow classmates who could be targeted.

Danielle Rios, a junior from Chicago studying administration of justice, said she saw several giveaways during her freshman year. Rios said she did not sign up herself, because she feared she would use the card and get into debt. She said she thought younger students are particularly susceptible because they are drawn in by the giveaways and do not fully understand how a credit card can affect their futures.

"A lot of kids get pulled into it. They sign up but they don't realize what kind of danger they're putting themselves into as far as credit card debt," Rios said.

Melissa Mead, a graduate student from Harrisburg studying plant biology, said she has seen several promotions in her years at SIUC, including one at a Saluki football game where a credit card company was giving away T-shirts. She said she believes credit card companies promote around campuses because younger students are more impressionable.

"(College students are) a good age group to target because they do need money and they don't really understand the consequences of getting in debt because they haven't experienced it," Mead said.

Brandy Hetrick, financial specialist for ClearPoint Financial in Marion, said she has seen many college students and graduates damage their credit by signing up for cards before researching the consequences. ClearPoint is a non-for-profit financial company that specializes in financial counseling. Hetrick said college students commonly do not realize the future repercussions of their financial decisions.

"Depending on what line of work they're going to go into, future employers as well as realtors are going to view their credit to make determinations as to whether or not they're going to be eligible for that dream job they are applying for or even for a rental property," Hetrick said.

Hetrick said students should also watch for low "teaser" rates. In one instance, a former college student came to her who had signed up for a credit card as a freshman in order to get a free T-shirt. By the time he contacted ClearPoint, he had a debt of more than $1,200 with a 42 percent interest rate.

SIUC spokesman Rod Sievers said the university already has a policy in place that does not allow credit companies to solicit on campus. He said that if the giveaways have been happening on campus, credit companies have been running them against the university's policy. Credit card companies have no business on a college campus anyway, Sievers said.

"History has proven that people can get into trouble with these credit cards," Sievers said. "If a student wants a credit card, they can apply for one. They don't need to be enticed by someone on campus handing out T-shirts."

Though students and business owners have both said they have witnessed giveaways as recently as last spring, a representative from Chase Card Services said the company stopped giveaways in October, 2007.

Chase spokeswoman Elaine Franck said in an e-mail the company's overall goal was to help college students build good financial habits and a good credit history.

"Chase does not conduct student-focused credit card marketing on campus," Franck said. "We want to allow students to make thoughtful, non-pressured decisions about if and when a credit card is right for them, reward good credit behavior, and help them avoid fees, maintain their best interest rates and control their spending."

Justin Lange can be reached at 536-3311 ext. 258 or jlange@siu.edu