Credit card solicitations part of campus life nationwide
By Jennifer Hiller
Advertiser Education Writer
As a college student seeking free T-shirts, phone cards and shot glasses, Jennifer Bowes, 21, never thought twice about stopping when on-campus solicitors hawked credit cards.
Advertiser library photo 1997
More than two-thirds of college students have at least one credit card.
Advertiser library photo 1997
As a joke, Bowes would write on the applications that her annual income was $100 in allowance from her parents.
"I would always get approved," said Bowes, a 21-year-old senior majoring in communications. "Every time."
As thousands of students like Bowes return to the University of Hawai'i-Manoa campus tomorrow, they'll be greeted by professors, old friends and someone especially eager for their business: the credit card soliciter.
For a free knickknack emblazoned with university insignia, college students who often have no job or credit history can receive a credit card with a credit limit typically from $300 to $1,500. A government report released this summer said that credit card companies are aggressively marketing to college students through direct mail, on-campus solicitation, the Internet and phone calls.
At the same time student indebtedness is on the rise, and many colleges across the country including some in Hawai'i are getting into the credit card business themselves by offering school logo cards that often benefit the alumni association, athletic department or general fund when students sign up.
"Demographically this population is the target population for these companies," said Alan Yang, dean of students at UH-Manoa. "They are in college. They will have a higher income and the ability to pay. The consumer taste they have is the kind that the credit card companies would aim for."
'Tabling' common at UH
More than two-thirds of all college students have at least one credit card, according to a report issued this summer by the U.S. General Accounting Office. One-quarter of college students receive their cards from some type of on-campus solicitation, often known as "tabling," when marketers set up tables and pass out the school logo T-shirts, mugs or other paraphernalia.
Although Bowes said she usually takes the free gift and cancels the credit cards, she has kept two accounts open. When she first received them, the cards would sometimes get hit by a late fee or high interest rate when she carried a balance. "They screw me every chance they get," Bowes said. "I never use them anymore. I learned my lesson."
"It's all about the free stuff," said Abbie Mark, 20, a senior management major at Manoa. Although Mark said she uses her summer jobs to pay off whatever balance she has accrued during the year, some of her friends owe as much $15,000 on credit cards they have received on campus.
Tabling is common at UH-Manoa during the first days of the semester. It happens less frequently at Hawai'i Pacific University, where the school's card is marketed mostly to alumni. Chaminade University of Honolulu does not have a credit card agreement, but allows marketers onto campus. Brigham Young University-Hawai'i discourages credit card solicitation on campus, although it allows local banks to come and help students set up accounts.
Of those schools, Chaminade and HPU offer financial responsibility seminars.
UH has the most lucrative agreement with a credit card company. The athletic department receives $300,000 a year in an agreement with MBNA, the world's largest credit card issuer and a mainstay on many college campuses across the country.
While $75,000 per quarter is guaranteed, the university could receive more money if the number of new signups or the amount of balances carried over increases, said Jim Donovan, associate athletic director.
The athletic department entered into the MBNA agreement in 1998 when then-President Kenneth Mortimer told officials their department needed to become self-sustaining. "He wanted us to get new, nontraditional sources of revenue," Donovan said. "This was one of the ideas we came up with."
The card has proven popular. Of 11,000 cardholders, 2,500 are students.
HPU's MBNA card, which is marketed only to its alumni, brings the school's general fund about $4,000 a year. "People remember us as they pull it out of their wallet," said Margi Ulveling, associate vice president for development and alumni relations. "They'll have that positive response to the university, unless of course they have a huge balance."
Some students have inquired about getting the HPU card, but so far there has been no direct marketing to the student body, Ulveling said.
While the GAO report said credit cards generally are considered a benefit and convenience for students, it noted that some students do not understand the responsibility of holding a card or the implications that a bad credit history could have in the future when they try to buy a house or car.
Cards for emergencies only
Wayne Tanna, an accounting professor at Chaminade and an attorney who teaches people how to file for bankruptcy through Volunteer Legal Services, said he sees an increasing number of college student and recent graduates filing for bankruptcy.
He said many college students do not understand the implications of missing a payment, getting a cash advance or having interest accrue. Making the minimum $20 payment on a $1,000 balance at 18 percent interest will take nine years to pay off, he said.
During Tanna's financial responsibility seminar at Chaminade, he warns students about the risks and tells them to limit credit card use to emergencies. "If you can eat it or wear it, it's not an emergency," he said.
Most college students use their cards responsibly, though. Nearly 60 percent of college students report paying off their credit card balances each month, the GAO report said. Of the 42 percent who said they do not, the average balance was $577.
Experts say the real problem often occurs after graduation when most students are cut loose from their parents financially and their credit cards and student loans come due at the same time.
According to the GAO report, about half of all college students in 1999 owed $19,400 in student loans upon graduation. At UH, where 89 percent of the students work while going to school, the average student loan indebtedness is $12,442. About 32 percent of UH-Manoa student take out student loans.
"They get out of college and they have these huge balances," said Chuck Crawford, managing director of Consumer Credit Counseling Service of Hawai'i. "We see a lot of that. People are paying years down the road."
The lesson can be a hard one for students and recent graduates.
"I had a credit card when I was 18, and I screwed it up," said Neillee Harold, 24, a historical archaeology major at UH-Manoa. Although she charged around $300, Harold ignored her payments and mounting interest for a couple of years.
Her debt and late fees ballooned to $1,200 and collectors started calling her mother and boyfriend trying to find her. Harold eventually settled with the credit card company for $600.
Solicitations hard to ignore
Even students who do not routinely use credit cards find the solicitations hard to ignore.
Michelle Rooney, 18, a sophomore botany and anthropology major, said she has one credit card that she uses infrequently. "I get so mad," she said. "I get a credit card thing every day in the mail. I pretty much think credit card companies are trying to scam college students. I always throw them away."
Sava Ognjanovic, a computer science major at Hawai'i Pacific University, said he has only applied for a credit card once, but receives e-mails and direct mail solicitations from credit card companies constantly. He ignores them.
"I don't think I really need one," he said. "If I'm short, I just borrow from a friend."
In rare instances, credit card debt has caused so much stress that it has led to suicide. A University of Central Oklahoma student in 1997 hung herself after losing her job. She left her checkbook and credit card bills spread over the bed in her dorm room.
Nationally, some are pushing to restrict credit card solicitation on college campuses. In Hawai'i a few years ago, a proposed legislative resolution requesting that the UH Board of Regents prohibit on-campus credit card marketing died.
Rep. Roy Takumi, chairman of the House Higher Education Committee, said he has not heard of any movement to resurrect the resolution. And he wouldn't support it if it did.
"I think the majority of students who have credit cards use them responsibly," he said. "They're adults. Maybe that's another lesson in life. Some of us learn the hard way."
Gail Koki, director of financial aid services at UH-Manoa, doesn't deal with credit card debt, but said she thinks Hawai'i students in general are more reluctant than others to borrow heavily to go to college. The number of students taking out loans and the amount of those loans is much lower than the national average.
"They don't want to borrow," she said. "The father will have two jobs and the mother will have two jobs and the student will do the same to come up with the money."
Even Tanna, an opponent of on-campus marketing to students, says the credit card problems stem as much from a need for instant gratification as the granting of credit to people who shouldn't have it.
"It's one thing to work with someone filing for bankruptcy who has worked 15 or 20 years and loses their job or has a medical problem. That's what this system is for," Tanna said. "There's a feeling inside you when you see someone so young. I don't say anything. In the back of your mind, you're saying, 'What were you thinking?' Some students lose control. The credit cards enabled them to do that."
Reach Jennifer Hiller at firstname.lastname@example.org or 525-8084.