Debt drives people into bankruptcy.
Student debt drives students into insolvency, that is, being broke, but many are not helped by bankruptcy.
Student loans already saddle many college students with big debts on graduation.
Now, more details are emerging on how colleges profit from getting their students into even more debt, with credit cards.
Credit card companies pay the colleges for names and other information, and rights to market to students.
The Huffington Post reports identifying the the following practices:
“# Sell students’ personal information. Many are contractually obligated to share students’ names, phone numbers and addresses with banks.
# Earn royalties: Banks typically pay schools $1 for each student who keeps a credit card open for 90 days. When students carry a balance, some schools can collect up to $3 more per card.
# Cash in each time a student uses plastic: Many schools are entitled to receive 0.4 percent of all retail purchases made with student cards.
# Benefit from marketing incentives: When a university or alumni association agrees to market cards to students itself, the payoff is greater — sometimes up to $60 for each card opened through a school’s own marketing.
# Offer special perks: Banks sometimes gain special access to athletic events. Cornell University must provide Chase Bank with tickets and “priority” parking passes at football, basketball, hockey and lacrosse games.”
Bad enough to do these things, and without any disclosure, until the recent credit card reform legislation.
But few colleges, if any, are posting this information online so that people can make informed decisions.
But to dump this on your students, few of whom have any real income, most of whom are already in debt with student loans, is unconscionable.
The colleges participate, if not direct, the national myth about the value of a college education.
Hey, if you could get the government to subsidize the cost of your product, that would help your business, right?
Young people frequently lack the perspective to understand how long it will take to pay off student loans, how hard it will be to get a job with enough income to do that, and how having to repay the loans restricts their other options.
Like, being able to buy a house.
Colleges Profit From Student Debt and Student Loans