Cashing In on Credit

IT'S BECOME COMMONPLACE for university alumni associations to offer credit cards, and the University of Minnesota is no exception. For several years, the UM's University Alumni Association has been offering a credit card to alums, according to Margaret Carlson, executive director of the association. But about 12 percent of card users are students. And the presence of promotions material for the Alumni card on campus has led some students to question whether the card is being promoted to students.

While alumni association officials and credit-card issuers alike insist that the "affinity cards" aren't aimed at those who have yet to graduate, local students tell a very different story. They say the high-rate credit cards have become a way for alumni associations to cash in on students, compounding the problems of the ever-increasing number of students leaving universities in debt for something other than financial aid.

The relationship between the card company and the alumni association is reminiscent of other deals University organizations have been making with private companies in order to help pay the bills. Last spring, Coca-Cola became the UM's exclusive soft-drink vendor in exchange for a share of the company's campus profits.

The relationship between the Alumni Association and First USA Bank is a financial one, says Matt Ledwith, assistant vice president of Affinity Marketing for First USA Bank. Every time a card owner uses the card, the Alumni Association benefits. First USA has similar arrangements with close to 100 universities. "You can count on your hands the number of universities that don't have a program like this," he says. In fact, the alumni associations at the universities of Iowa, Wisconsin, and South Dakota also offer cards, with MBNA and First USA issuing the bulk of alumni affinity cards nationwide.

Emblazoned with a large M on the front, the University of Minnesota Alumni Association card has no annual fee and a low introductory interest rate that changes after about six months. Even though the card isn't supposed to be targeted towards students, First USA is prepared for student use of the Minnesota Alumni card: University graduates enjoy a beginning interest rate of 5.9 percent, which jumps to 15.9 after the introductory period; students start at an interest rate of 9.9 percent, which increases to 17.9 percent.

The card is geared toward alums and all marketing is done toward that end, Carlson says. Although Alumni Association card promoters are at UM sporting events, at Grad Fest, and in Coffman Union signing up new card members, students are not its primary audience. "Students can elect to sign up but they're not our primary focus." No students receive a mailing promoting the card prior to their graduation, she adds.

Never mind that that's exactly how Renee Anderson, a UM sophomore, got her Alumni Association card, although she says she's seen tables on campus promoting the card and offering perks, such as T-shirts to students who fill out an application. The offer came in the mail to her dorm room during her freshman year. Two of her friends also have the card, but they applied at university sporting events. University officials say that as yet, they have no policy barring credit-card issuers from using facilities like Coffman to solicit business, so long as the creditor employs at least one student.

"Over the last 10 years, we've seen a gradual increase in the number of clients just out of college with credit-card debt they accumulated in college," says Wayne Wensley, president of the nonprofit Consumer Credit Counseling Service in Minneapolis. "Credit-card companies definitely are marketing and marketing heavily toward students. The university affinity card is just one more."

The mailing that reached Anderson is the only one Ledwith remembers. About two or three years ago, First USA did sent out a promotional mailing to students using a list bought from a private organization that sells lists of university students' names. "The alumni association has actually been very restrictive, we've never done a mailing from a list provided by them," he says.

But for Anderson, how restrictive the Alumni association has been with lists of students isn't the point; "They're all over campus, at Coffman and Dome events, places where the crowd is most likely students." It may not be wrong for the alumni association to offer the card, she adds, but it is wrong to say that the card isn't marketed to students. "I've never seen a student turned down for the card because they were a student."

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