Illinois treasurer visits UI to warn about credit-card offers

By Julie Wurth
Champaign News-Gazette, Champaign, IL
Published Wednesday, September 10, 2008

URBANA – University of Illinois student Joanna Zahn thought she'd outsmarted a credit card solicitor when she supplied a fake address and Social Security number – all in the quest to get the free Subway sandwich promised in a coupon.

She never got the card, but to her surprise the information showed up on her credit report, and she had to make the effort to close the account and get it off her record.

"We thought we were being slick," said Zahn, now a UI senior. "All they need is your name."

State Treasurer Alexi Giannoulias announced legislation Tuesday that would put more limits on "predatory" marketing efforts by credit-card companies on college campuses.

Some credit-card companies and banks lure cash-strapped college students with T-shirts, backpacks, food and other gifts to apply for credit cards with low teaser rates, he said.

Unsophisticated about credit, many students end up piling on debt, he said.

"With all the other expenses students face – tuition, ridiculous textbook prices, room and board – the last thing students need is to accumulate unpaid credit card debt as well," said UI junior Tom Pifko.

A 2005 study by student-loan lender Nellie Mae showed 76 percent of all undergraduates had at least one credit card, and 56 percent of all seniors had four or more, with an average balance of $3,000 on top of their student loans, Giannoulias said.

"A $10 T-shirt or a $4 sandwich could cause financial hardship for years and years," he said.

Legislation that took effect in 2002 banned giveaways on campuses and prohibited schools from providing student lists to credit-card companies, said Giannoulias spokesman Scott Burnham. But school-affiliated organizations, such as alumni associations, were not included, he said.

The UI Alumni Association issues a credit card through Bank of America, but even though all current students are automatic Alumni Association members, they're not included in the credit-card offer, said membership Vice President Joe Rank.

UI officials say they haven't provided any student information to credit issuers since the last contract was renewed in 2002.

"We have been quite careful here," said Doug Beckmann, senior associate vice president for business and finance.

The Alumni Association earns about $3 million a year from the credit-card arrangement, said Giannoulias spokeswoman Kati Phillips, based on financial reports on file with the state.

Rank said most abuses don't come from banks or credit companies that have formal arrangements with universities, but from generic credit-card companies that set up a table in front of a business on Green Street.

"That's still happening," Beckmann said, and there isn't much the UI can do about it.