A new Federal Reserve report shows that in 2010, credit card issuers paid $73 million to colleges as part of marketing deals — down 14% from $85 million in 2009.
The culprit? The Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act), which went into effect in February of last year. That act placed restrictions on on-campus marketing and made it more difficult for students to get credit cards — although, as I reported earlier this year, the regulations governing student access to credit cards are so loophole-ridden that they’re almost a complete joke.
But here’s the question: Other than cutting off a stream of revenue to cash-strapped colleges, have we really accomplished anything? Consumer debt is on the rise and college students are still able to qualify for credit cards by listing their student loans as income. As a matter of principle, I certainly think it’s good that colleges are taking less money from the financial services industry.
But is there any actual net gain for consumers there? I’m not so sure.
USA Today reports that alumni association cards still allow colleges to cash in based on the amount of debt that graduates carry — which must be an excellent source of revenue given how few college grads are finding work these days. That’s the college business model today: Charge someone $200,000 for a degree that doesn’t get them a job, and then take a cut on the interest they pay when they survive off their 18% APR credit cards with your logo on them. Oh. My.