In my last post, I wrote about getting my first credit cards as a college freshman in 1998. Two cards, no income, no real understanding of what I was signing up for. I maxed them out within months and spent years digging myself out.
But here’s what I’ve come to understand since then: I wasn’t unusual. I wasn’t even unlucky. I was just one of millions of students who went through the exact same thing.
Every friend I had in college was in a similar situation. We’d all signed up at the same tables, taken the same easy applications, gotten in over our heads in the same ways. We didn’t talk about it much. There was shame attached to it, I think. But looking back, I can see we were all struggling with the same thing. We just thought it was normal.
The thing is, it wasn’t normal. It was a system, and it was working exactly the way it was designed to work.
If you were on a college campus in the 1990s or 2000s, you probably remember the tables. They’d be set up in the student union, outside the bookstore, near the dining hall. Representatives from Visa, Mastercard, Discover, the big banks. They’d have free stuff. T-shirts, frisbees, pizza, candy. Sometimes bigger incentives. By the mid-2000s, some were offering iPods just for filling out an application.
The pitch was simple. You’re a college student. You need to start building credit. This is how responsible adults do it. Sign here.
By 2008, more than half of college students had a credit card by age 18. By senior year, 91 percent had at least one card. More than half of graduating seniors carried four or more.
A 2008 survey found that three out of four students had stopped at one of those campus tables to consider an offer or fill out an application. Eighty percent reported getting credit card solicitations in the mail.
This wasn’t some accident. It was a coordinated, well-funded marketing operation aimed directly at young people who had almost no financial education and, in most cases, no income.
Here’s the part that still gets me: the colleges were in on it.
In 2009, credit card companies paid colleges and universities more than $84 million for the right to market on campus. Schools got paid for access. They let the companies set up those tables, put logos on student ID cards, and in some cases, hand over student contact information.
Some of the deals were enormous. Brown University had an agreement with Bank of America reportedly worth $2.5 million. The University of Michigan had a similar deal worth $2.3 million. These weren’t just arrangements to allow marketing. In some cases, schools got paid based on how many students signed up, or how much those students spent on their cards.
I still have a hard time wrapping my head around that. The institutions responsible for educating young people were being paid, directly, based on how much debt those young people took on.
The average credit card debt for graduating seniors rose from about $2,100 in 2004 to over $3,100 by 2008. That might not sound catastrophic. But for students already juggling tuition and loans and part-time jobs, it was often enough to tip things over the edge.
And here’s what the statistics don’t capture: the stress. The anxiety. The way it follows you around.
I wrote in my last post about that knot in my stomach every time a check came. The fear of the card getting declined. The mental math I was always running, trying to figure out if I could afford to eat lunch with my friends. Honestly, that was my daily life for years. And I know now that millions of other students were living with that same weight.
For some, it got much worse. The stress turned into depression. The depression turned into something darker.
In 1999, the Consumer Federation of America released a study on student credit card debt. The study documented what researchers called “a growing collegiate crisis,” but it also told the stories of two students in Oklahoma who had taken their own lives.
Sean Moyer was a junior at the University of Oklahoma and a National Merit Scholar. He worked part-time, earning minimum wage as a salesman and gift wrapper. But he had accumulated twelve credit cards and $10,000 in debt. A week before he hanged himself in February 1998, he told his mother he had no idea how to get out of his financial mess and didn’t see much of a future for himself.
Mitzi Pool was a freshman at the University of Central Oklahoma. She was eighteen years old. Her weekly income rarely exceeded $65, but she had three credit cards and $2,500 in debt. When she hanged herself in her dorm room in 1997, her checkbook and credit card bills were spread out on her bed.
These were young people just starting their lives. They saw no way out from under the financial hole they’d fallen into.
I don’t know how many other students across the country reached that same point. I don’t think anyone kept a full count. A University of Indiana administrator said in 1998 that they lost more students to credit card debt than to academic failure. I have no idea if that was literally true, but the fact that someone in that position felt it was true tells you something.
And the fact that any of this happened at all, that the system pushed young people to that edge, tells you everything you need to know about how much the people running that system cared about the students themselves.
And the honest answer is, they didn’t care. Not enough. To the credit card companies, and apparently to the colleges taking their money, the students were the product.
In 2009, Congress finally passed the Credit Card Accountability Responsibility and Disclosure Act, better known as the CARD Act. It put real limits on how credit card companies could target young people. No more gifts for signing up within 1,000 feet of a campus. No more approving applicants under 21 without a co-signer or proof of income. Schools had to start publicly disclosing their marketing agreements with card issuers.
It worked. Credit card accounts among college students dropped 17 percent after the law passed. The number of affinity agreements between banks and schools fell from over a thousand to around six hundred. Payments to colleges dropped from $84 million to $50 million.
The CARD Act made a real difference. But it came in 2009. I graduated in 2002. The students who took their own lives in Oklahoma, that was 1997 and 1998. For a lot of people, the help came too late.
And the thing is, the targeting didn’t stop. It just changed. The companies found new ways to reach young people, new products to sell them, new loopholes to exploit.
That’s what I want to look at next.
Sources
- Student credit card statistics (2008): U.S. PIRG Campus Credit Card Survey
- Payments to colleges ($84 million): Federal Reserve Report to Congress, 2009
- Brown University and University of Michigan agreements: Affinity card agreement disclosures
- Sean Moyer and Mitzi Pool: Consumer Federation of America, Credit Cards on Campus: Costs and Consequences of Student Debt, 1999
- CARD Act effects: Government Accountability Office report on college credit card agreements, 2012