Student Credit Cards: $83 Million Dollar Pay Off

Do university administrators feel guilty about encouraging their students to sign up for credit cards that provided kickbacks to their schools?

Of course, these administrators should. Over the year, hundreds of colleges gave student credit card issuers amazing access in return for cold cash. Colleges surrendered such personal information as student emails, addresses and phone numbers so these companies could pelt students with promotions. And schools allowed credit card issuers on their campuses where they lured kids into signing up for student credit cards in return for t-shirts or other freebies.

We probably won't ever know if university administrators feel ashamed about serving their students up on platter. But thanks to a new Federal Reserve study written for Congress, we do know how much money universities and alumni associations were pocketing thanks to their alliances with credit card issuers.

Last year credit card companies issued more than $83 million to universities, alumni associations and foundations, according to the Federal Reserve report, which was mandated by landmark federal legislation making it much tougher for students to obtain credit cards on college campuses.

In 2009, 53,164 credit card accounts were opened thanks to these higher-ed agreements. The Federal Reserve counted more than 2 million credit cards still in use that were generated by these agreements over the years.

In the report, 17 financial institutions revealed a total of 1,044 credit card agreements. Forty percent of the agreements were with schools and the next biggest source were alumni associations.

10 Biggest Student Credit Card Sources

Names 2009 payments Accounts

1. University of Illinois Alumni Assn. $3.2 million 25,528
2. Penn State Alumni Assn. $2.8 million 74,832
3. University of Notre Dame $1.8 million 27,574
4. Wisconsin Alumni Assn. $1.6 million 22,847
5. Golden Key Int. Honour Society $1.5 million 38,692
6. University of Southern California $1.5 million 21,824
7. Alumni Assn. U. of Michigan + Regents $1.5 million 38,358
8. University of Tennessee $1.4 million 10,963
9. Greater U. of S. Carolina Alumni Assn. $1.4 million 6,964
10. Duke Alumni Association $1.3 million 8,418

Lynn O'Shaughnessy

View all articles by Lynn O'Shaughnessy on CBS MoneyWatch»
Lynn O'Shaughnessy is a best-selling author, consultant and speaker on issues that parents with college-bound teenagers face. She explains how families can make college more affordable through her website TheCollegeSolution.com; her financial workbook, Shrinking the Cost of College; and the new second edition of her Amazon best-selling book, The College Solution: A Guide for Everyone Looking for the Right School at the Right Price.

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