Giannoulias bill supports fair campus credit card marketing
SB1524 pass Higher Education committee today

March 9, 2009

A bill drafted by Illinois State Treasurer Alexi Giannoulias that would crack down on predatory credit card marketing practices on college campuses passed out of committee today.

Senate Bill 1524 promotes responsible credit card marketing at Illinois colleges and universities by banning free gifts and making all contracts with credit card issuers subject to the Freedom of Information Act.

In addition, the bill prohibits the transfer or sale of student names and contact information to credit issuers and requires colleges to offer financial education to freshmen if credit cards are marketed to undergraduates.

Currently, credit card companies and banks can use free gifts and food to lure cash-strapped college students into applying for credit cards with low teaser rates, hidden fees and universal default.

The law also allows school affiliates to enter into secret agreements with banks and credit card companies to exclusively promote their cards to students. In some cases, the colleges or affiliates get a cut of what the students spend, which makes the school a partner in the piling on young adults’ debt.

“By the time an average undergraduate student reaches his or her senior year, more than half of them have four or more credit cards,” Giannoulias said. “Credit card companies are employing sophisticated methods and giving away free gifts to lure students, many of whom have no verifiable income and rack up huge debt that can haunt them for years to come.”

Student loan lender Nellie Mae conducted a student survey in 2005 that showed 76 percent of all undergraduate students had at least one credit card. However, by their senior year, 56 percent carried four or more cards with an average balance of nearly $3,000 on top of student loans.

The bill is sponsored by State Sen. Donne Trotter (D- Chicago). A similar measure awaits action in a House Committee, House Bill 2352 is sponsored by State Rep. Kevin Joyce (D-Chicago).

Several schools and advocates are supporting the legislation, including the Federation of Independent Illinois Colleges & Universities, University of Illinois, U.S. Public Interest Research Group and Consumer Credit Counseling Services of Greater Chicago.