Creditnet News Story
Students can be hurt by university credit card arrangements
Friday, September 10, 2010
By Sam Lee
Although it has become less popular in recent years, many schools of higher education across the country still make agreements with credit card companies that can end up being financially unhealthy for their students.
According to a report in the Miami Herald, while many schools are scaling back arrangements between themselves and credit card companies - which are known as affinity agreements - some have not. These deals raise money for schools by both selling access to databases with information about students, faculty, alumni and supporters and letting the lender be the exclusive carrier of the university credit card.
In many cases, the participating schools also get bonuses if people using the card have a certain amount of debt, the report said. For example, the University of Central Florida's arrangement with Bank of America pays it $1 for every non-student who carries debt from one year to the next, and another $20,000 if the total amount owed on its cards is $900,000 more than the year prior.
The State Universities of New York recently agreed to end such an agreement after state Attorney General Andrew Cuomo launched an investigation into these practices.
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