Ohio state representatives are working to curb credit card debt among college students.
State representatives are working on legislation to terminate affinity credit card agreements between public universities and banks. Affinity agreements are when an institution provides its logo or trademark emblem for use on a credit card, and potentially provides its lists of members to the credit card company.
However, according to Bill Shawver, senior director of Purchasing and Central Services, Miami University is currently discussing a new affinity credit card agreement with several undisclosed banks because the university's previous contract with Chase Bank terminated in April.
Shawver said that the new agreement would be "mindful" of the pending legislation.
"We're going to follow the laws of the state of Ohio no matter what," Shawver said. "(The agreement discussions) will be kind of a moot point if legislation says there's no university involvement in credit card companies marketing to students."
According to assistant vice president of alumni relations Ray Mock, banks are engaged in affinity credit card deals to provide the revenue to universities, and so they can come to campuses and market to students during financial workshops.
"Banks come to campus and (hold) financial seminars for students," Mock said. "They are trying to be responsible citizens and give students counseling about how to use the credit cards as well. They want you to feel good about the fact that they came to campus and provided you with a credit card and advice on using it."
According to State Representative Matt Lundy (D-Elyria), 78 percent of college students have at least one credit card, with the average credit card debt among college students falling between $2,200 and $2,400.
Lundy said that he was "troubled and concerned" with the debt students are racking up on credit cards and he felt the need to bring forward legislation.
Lundy, along with Representative Matt Huffman (R-Lima), proposed House Bill 608 to the Ohio House of Representatives Aug. 18. The bill is currently awaiting committee assignment, Lundy said.
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Bill 608, if passed in its current form, would prohibit credit card companies from marketing on state college and university campuses in the form of presentations and paper advertisements, which includes a logo on the credit card. The bill would also prohibit state colleges and universities from releasing student directory information to any group engaging in profit, according to Lundy.
"Far too many students are graduating with significant college (tuition) debt, let alone credit card debt, or they are being forced to drop out of school because they have credit card bills to pay," Lundy said. "Universities shouldn't be opening up the front gates to allow credit card companies to pour in."
According to Claire Wagner, director of news and public information, Miami's previous affinity credit card agreement with Chase Bank called for a five-year contract from May 2003 to April 2008. The contract entitled Miami to receive a .75 percent on retail sales made with credit cards and $1 for each new and renewed card.
It also guaranteed the university a minimum of $3.25 million over five years, paid as $650,000 a year. The funds were distributed to land purchases by the university including purchases within the Oxford Mile Square, Wagner said.
After Bill 608 was proposed, Miami continued their new credit card negotiations but instead of marketing to students, they target alumni, faculty and staff, Shawver said.
"(Our proposal for the) affinity credit card program included alumni as the predominant group as well as faculty and staff," Shawver said. "We're continuing negotiations that will not include the student population at this time."
Ray Mock, assistant vice president of alumni relations, said that the affinity credit card programs benefit from the opportunities to promote the brand of the university as well as from revenue streams provided to the institution.
"Alumni that carry the credit card have a daily reminder of the institution they attended," Mock said. "They understand that by acquiring that card from the university is no different than getting from an NFL football team or the American Cancer (Society). (The credit card) speaks to a value that you hold dear and it provides the opportunity to support that institution."
Despite the financial benefits for universities, Lundy said that universities are hurting themselves by opening the door for their students to fall into debt. He hopes that the legislation of Bill 608 will call attention to the fact of "what is the right and responsible thing to do."
"We're losing sight of what's important and what's important is keeping kids in school," Lundy said. "Banks are trying to tell me that they thought students were using (their credit cards) for emergency parking tickets or books. I find it a little hard to believe that nobody uses them for games or music or to pick up their beer supply for the weekend."
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