Consumer Finance: College Students and Credit Cards (20-JUN-01,  
GAO-01-773).							 
								 
Credit cards offer clear advantages to college students because  
they provide an interest free loan for students until the payment
is due and a convenient noncash payment option for both routine  
transactions and emergencies. If used responsibly, credit cards  
allow students to build up credit histories that will facilitate 
increased access to credit in the future. However, if college	 
students have not learned financial management skills in their	 
secondary education or from their parents and misuse their credit
cards or mismanage their credit card debt, the disadvantages can 
outweigh the advantages. GAO found that more than one-third of	 
students had credit cards before they entered college, and	 
another 46 percent acquired them during the first year. Except	 
for charges for tuition and fees, their spending patterns	 
resembled those of nonstudents. GAO did not find a uniform	 
response to the controversial issue of on-campus credit card	 
marketing among the universities GAO visited. In response to	 
complaints about aggressive marketing techniques, a few 	 
universities had adopted policies restricting credit card	 
solicitation on campus. The credit card issuers that responded to
GAO's inquiries participated actively in the student market, but 
they did not have a uniform set of policies or practices.	 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-01-773 					        
    ACCNO:   A01215						        
  TITLE:     Consumer Finance: College Students and Credit Cards      
     DATE:   06/20/2001 
  SUBJECT:   College students					 
	     Credit						 
	     Financial institutions				 
	     Financial management				 
	     Colleges and universities				 
	     Debt						 
	     Statistical data					 
	     Marketing						 

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GAO-01-773
     
Report to Congressional Requesters

United States General Accounting Office

GAO

June 2001 CONSUMER FINANCE

College Students and Credit Cards

GAO- 01- 773

Page i GAO- 01- 773 College Student Credit Cards Letter 1

Results in Brief 2 Background 5 Credit Cards Have Both Advantages and
Disadvantages for College

Students 8 Studies Provide Limited Information on College Students and

Credit Cards 15 Universities? Policies on Credit Cards Differ, But Most
Focus on

Solicitation 25 Card Issuers Customize Business Strategies for College
Students 34 Conclusions 42 Agency Comments and Our Evaluation 43

Appendix I Scope and Methodology 47

Appendix II State Legislation Regarding Credit Card Solicitation at
Institutions of Higher Education, 1999 to 2001 53

Appendix III Additional Studies of College Students and Credit Cards 67

Appendix IV Card Issuer Code of Conduct 69

Appendix V GAO Letter to Card Issuers 71

Appendix VI GAO Contacts and Staff Acknowledgements 73

Tables

Table 1: Minimum Repayment Schedule on a $2,000 Credit Card Loan at 19
Percent 10 Contents

Page ii GAO- 01- 773 College Student Credit Cards

Table 2: Proposed or Enacted State Legislation on Credit Card Solicitation
at Institutions of Higher Education from 1999 to 2001 54

Figures

Figure 1: Nonacademic Entities of a University 6 Figure 2: Proportion of
Debtors Filing For Bankruptcy by Age

Group 13 Figure 3: Percent Growth in Bankruptcy Filings By Age of

Petitioner- 1991 to 1999 14 Figure 4: Comparison of TERI/ IHEP Study and
Student Monitor

Study Results on College Student Credit Card Acquisition and Payment 16
Figure 5: Number of Credit Cards in Students? Name 18 Figure 6: Credit
Limits on College Students? Cards 19 Figure 7: Categories of College Student
Credit Card Charges 22 Figure 8: Average Monthly Balances on Student Credit
Cards for

Students Who Carry a Balance, Reported in the Student Monitor Study 23
Figure 9: Average Monthly Balances on Student Credit Cards for

Students Who Carry a Balance, Reported in the TERI/ IHEP Study 24 Figure 10:
University Policies on Credit Cards 26 Figure 11: Universities? Financial
Education Programs 32 Figure 12: Credit Card Issuers? Marketing Methods 37
Figure 13: Credit Card Terms for Students and Nonstudents 39 Figure 14:
Three Studies on College Students and Credit Cards 49

Page 1 GAO- 01- 773 College Student Credit Cards

June 20, 2001 The Honorable Louise M. Slaughter House of Representatives The
Honorable John J. Duncan House of Representatives The Honorable Paul E.
Kanjorski House of Representatives

This report responds to your request that we examine several issues related
to college students 1 and credit cards. 2 Eighteen year olds can enter into
a financial contract for a credit card in their name- without the consent or
signature of a parent or guardian- in most states. Controversy and media
attention have surrounded these issues in recent years, and several state
legislators and members of the U. S. Congress have introduced legislation
related to college students? use of credit cards. As agreed with your
offices, our objectives in this report are to describe (1) the advantages
and disadvantages credit card use presents to college students and available
bankruptcy data, (2) the results of key studies showing how college students
acquire and use credit cards and how much credit card debt they carry, (3)
universities? policies and practices related to on- campus credit card
marketing, and (4) the business strategies and educational efforts credit
card issuers direct at college students.

To address your request, we conducted structured interviews of about 100
officials at 12 universities and colleges around the country, including
student deans, bursars, comptrollers, financial aid officials, student union

1 By ?college students,? we mean those enrolled full time as undergraduates
at 4 year colleges and universities in the United States. There were 5. 4
million full- time undergraduate students at 4- year colleges and
universities in the United States in the Spring of 2000. See Student
Monitor, Financial Services, Ridgewood, NJ: 2000.

2 The focus of this study is the ?bank card? issued by American Express,
Discover, and the financial institutions that are members of MasterCard and
Visa. These cards are generalpurpose credit cards that allow customers to
carry an unpaid balance, require a minimum payment each month, and charge
interest on the unpaid amount. Our scope does not include travel and
entertainment cards that do not allow the user to roll over an unpaid
balance from month to month, credit cards that can be used only at a
specific store, or debit cards that deduct the cost of purchases directly
from consumer checking accounts. For a general discussion of credit cards
see Thomas A. Durkin, ?Credit Cards: Use and Consumer Attitudes, 1970-
2000,? Federal Reserve Bulletin, Sept. 2000; and David Evans and Richard
Schmalensee, Paying With Plastic: The Digital Revolution in Buying and
Borrowing, Cambridge, MA: MIT Press, 1999.

United States General Accounting Office Washington, DC 20548

Page 2 GAO- 01- 773 College Student Credit Cards

directors, alumni association officials, credit union officials, and student
government representatives. We selected a variety of universities based upon
their status as public or private institutions, geographic region,
admissions policy, size and composition of the student body, cost of
attendance, and other factors. On campus, we also collected credit card
applications and observed the solicitation of students at tables set up in
student unions. We also interviewed officials from five consumer groups and
five credit card issuers. We analyzed studies on college students and credit
card use as well as documentation from universities, consumer groups,
academics, and federal bank regulators.

Credit card issuer participation in our study was voluntary because we do
not have a legal right of access to any account data or business information
of credit card issuers. We obtained information on business strategies from
six large credit card issuers. 3 Some credit card issuers were not
comfortable discussing certain issues, citing the confidential and
proprietary nature of information such as the criteria the companies use to
evaluate applications. One credit card issuer declined to meet with us or to
answer written questions we submitted. Because we were unable to get account
data from major credit card issuers we were unable to address some questions
you asked, such as whether college students manage their credit card debt
differently than other groups including new credit users and general credit
card users. We are continuing our negotiations with nine credit card issuers
on creating a pooled database of information from credit card accounts that
would allow us to undertake an independent analysis of college students?
accounts and compare them with the accounts of other types of credit card
users. If these negotiations were to be successful, we would issue a
separate report to you on the results of that work. Appendix I provides a
complete description of our scope and methodology. Appendix II provides the
information you requested about actions taken or pending in state
legislatures since January 1999, regarding college students and credit
cards.

Credit cards were generally perceived as advantageous to college students,
but there was also concern about the risks they presented for this group.
Students, university officials, and representatives of consumer

3 This report focuses on credit cards that college students have obtained in
their own name and for which they have payment responsibility. Our scope
excludes credit cards cosigned by another individual- typically a parent-
who is responsible for making payments if the student does not. Results in
Brief

Page 3 GAO- 01- 773 College Student Credit Cards

organizations and credit counseling services agreed that credit cards
offered students many advantages. Credit cards provided convenience and
security and were especially useful in emergencies, allowing students to pay
for unplanned medical expenses or purchase airplane tickets home. In
addition, they allowed students to establish credit histories that can help
in acquiring additional credit in the future. But some university officials
and debt counseling services told us that they believed that college
students were more likely than other types of credit card users to run up
debts they could not pay because of their financial inexperience. This
problem could become particularly severe after graduation, when many
students must begin making payments on education loans (about half of
college graduates leave schools with an average of $19,400 in student
loans). Credit card debt combined with education loan repayments and other
expenses graduates may incur- such as renting an apartment and buying a car-
may create a substantial repayment burden. We were unable to determine how
many college students file for bankruptcy and what, if any, contribution
credit card debt might have been.

The three studies we reviewed showed that the majority of college students
had at least one credit card in their name, and some had credit card debt.
Two of the studies, which were representative of a larger national college
student population, but which relied on self- reporting, showed that 63 and
64 percent of students had credit cards. Most of these students (59 and 58
percent) reported paying their balance in full each month; among the 42
percent who did not pay in full in one study, the average balance was $577.
4 Much smaller percentages- 14 and 16 percent- said they had balances over
$1,000, and in one study, 5 percent reported balances exceeding $3,000. A
third study reported actual credit card balances from credit reports based
on a small sample drawn from students applying for a particular type of
student loan and was not designed to be representative of college students
as a whole. The study reported that 78 percent owned credit cards and
carried an average balance of $2,748. These higher numbers for credit card
ownership and average balances may reflect the different characteristics of
the subgroup applying for this loan and the fact that data from credit
reports, and not self- reports of indebtedness, were used. About one third
of the students said that they acquired credit cards through mail
solicitation (36 to 37 percent) and about one quarter from campus displays
and solicitation (21

4 Research suggests that individuals tend to underreport the amounts or
levels of certain information- such as consumer debt- that could reflect
poorly on them.

Page 4 GAO- 01- 773 College Student Credit Cards

to 24 percent). They reported using credit cards for a variety of expenses,
including books, supplies, food, clothing, entertainment, school fees, and
tuition.

Universities? policies and practices regarding credit cards- and in
particular regarding solicitation- varied not only across universities, but
also within the universities themselves. We found that policies were either
campuswide (all parts of the university were subject to one set of rules) or
allowed individual entities, such as bookstores, student unions, and alumni
associations, to set their own rules. Of the 12 universities and colleges we
visited, 2 state universities had relatively restrictive policies based on
state law; and one private university prohibited credit card solicitation.
Nine institutions had decentralized policies. On these campuses, for
example, a student union might restrict solicitation, while a bookstore
might not. In some cases, complaints from students about aggressive
marketing had led the universities to adopt policies restricting on- campus
marketing. Both university officials and students cited the personal
solicitation of college students on campuses as causing the most
controversy. One official pointed to the ?carnival atmosphere? marketers
created and many raised concerns about aggressive sales practices. Card
issuers paid credit card vendors by completed application. Several major
credit card issuers made an effort to address this problem by adopting a

?code of conduct? for contractors that solicit on campuses. All but two of
the universities had made efforts to educate students about handling their
finances, including offering informal ?financial education? presentations,
debt counseling, and on- line information. Two universities made bankruptcy
attorneys available to counsel students who were having financial
difficulties. One attorney told us that about one in five students who used
the legal service over the past 3 years sought advice or information on
credit card debt issues. Few of the universities we visited collected data
on why students left college, but most of the universities cited financial
concerns as possible reasons why college students decided to leave prior to
graduation.

As part of their overall business strategy, certain credit card issuers
marketed to college students because they viewed them as good customers who
would continue using the issuers? credit cards in a responsible way. These
companies used a variety of strategies to solicit students, including
soliciting on campus and the Internet, although many favored direct mail
marketing. Some issuers had arrangements with a certain part of a university
(e. g., an athletic department or alumni association) that allowed the
issuer to offer a credit card bearing the university logo in return for
payments from the issuer. Most of the issuers

Page 5 GAO- 01- 773 College Student Credit Cards

we talked with customized their risk management or underwriting standards
(or both) for college students and sometimes adjusted the terms and
conditions of the cards. Other companies treated college students like other
first- time cardholders. Card issuers distributed credit information
materials and provided financial support to financial literacy and debt
counseling organizations. Most card issuers provided counseling to help
college students who were having trouble making payments and worked out
payment plans or reduced interest payments. Some issuers referred students
to credit counseling services.

We obtained comments on a draft of this report from representatives of the
credit card issuers, the firms responsible for the studies we analyzed, the
universities we visited and staff of appropriate federal regulatory
agencies. The credit card issuer representatives objected to our
presentation of the views of university officials stating that they were not
necessarily a reflection of the experiences on campuses nationwide. Our
draft had noted that our sample was not intended to be representative of
universities in the United States, but we also noted that we interviewed
about 100 officials at 12 universities in different parts of the country and
with different characteristics of size, cost of attendance, and other
factors. The issuers? comments and our responses are summarized at the end
of the report. Officials of universities who reviewed the university section
of the draft report agreed with our presentation of their views and the
information they provided. All who reviewed the draft report or sections
pertinent to their organizations made some technical suggestions that we
addressed as appropriate. See pages 41 to 44. We are not making
recommendations in this report.

In this report, the term ?university? includes nonacademic entities such as
the university administration, student union, alumni association, athletic
departments, and bookstore. These entities may or may not be autonomous (see
fig. 1). Student unions are the center of college community life, serving
students, faculty, staff, alumni, and guests, and therefore are often the
focus of credit card marketing. Alumni associations provide a fund- raising
link to graduates, offer financial services to alumni and students, and
therefore can be a source of credit card customers. As taxpayer support for
universities has diminished relative to other sources of income,
universities have sought to raise funds by increasing tuition and Background

Page 6 GAO- 01- 773 College Student Credit Cards

fees and becoming more market oriented. 5 Some universities have sought
increased revenues through contracts with private companies (e. g., sale of
space for advertising at athletic arenas) and increased alumni donations.

Figure 1: Nonacademic Entities of a University

Source: GAO analysis.

The credit card industry is a major provider of financial services and a
multibillion- dollar industry. 6 According to the American Bankers
Association, in the second quarter of 1998 companies that issued Visa and
MasterCard credit cards had 335 million accounts, including 186 million
active accounts with balances totaling $401 billion. The top- 10 credit card
issuers held 75 percent of total bank credit card receivables. 7 The
preferred marketing technique for potential customers was direct mail- with
3.54 billion pieces of mail sent in 1999- but card issuers also used

5 Universities are generally tax- exempt charities, although some
components, such as bookstores, may be for- profit entities. 6 In mid- 1999,
revolving bank card credit totaled $585 billion, or 10. 4 percent of
outstanding consumer credit. This amount is slightly less than the $782
billion in other installment loans (13.9 percent of outstanding consumer
credit) and much less than the $4. 3 trillion in home mortgages- first and
second mortgages plus home equity loans (75.7 percent). See American Bankers
Association, Bank Card Industry Survey Report, Washington, D. C.: American
Bankers Association (1999).

7 The American Bankers Association listed the top- 10 issuers- ranked by
credit card receivables- in midyear 1999 as Citigroup, First USA, MBNA,
Chase Manhattan, Bank of America, Providian, Capital One, Household, Fleet,
and Wells Fargo.

Page 7 GAO- 01- 773 College Student Credit Cards

techniques such as ?tabling? 8 on university and college campuses. In
addition, some card issuers pursued ?affinity relationships? 9 with
nonfinancial organizations and institutions, including universities. These
relationships often result in a credit card bearing the business or
institutional logo and payments from the card issuers based on the number of
cards issued, the charges made to the cards, or both.

Some credit card issuers are engaged in the practice of extending credit to
borrowers who are at a higher risk of default than traditional customers.
These issuers are lending to borrowers who are attempting to establish or
expand their credit history. Many college students- mostly those who are
young, are not employed or have limited employment income, and have no
credit history- fall into this category. Bank regulators have noted that
these lending activities can present a greater- than- normal risk for
financial institutions and deposit insurance funds. 10 Customers, including
college students, with limited or no credit history and income will be
charged a higher interest rate to compensate for the higher risk of
repayment. Banks issuing credit cards are subject to oversight by federal
bank regulators to ensure compliance with federal laws and regulations. 11

Federal Reserve staff told us that credit cards issued to college students
had not been the focus of bank examinations because they tended to examine
the risk of the credit card portfolio as a whole and do not examine
subgroups of card holders- especially at banks where the credit card
portfolio is a minor portion of their financial business. These officials
said that college student credit card portfolios have not been viewed as
especially risky, even at banks whose primary business was issuing credit
cards. Office of the Comptroller of the Currency (OCC) officials told us

8 Tabling involves card issuers or their representatives who staff a table
at a campus location and market credit cards to students, and it may include
incentives to get students to apply for credit cards.

9 An affinity relationship is a contract between a group and a credit card
company that allows the group and issuer to market a card carrying a
specific logo, without the issuers name, and which offers benefits tailored
to the cardholder?s interest. The issuer often pays the sponsoring
organization a fee.

10 See Office of the Comptroller of the Currency, OCC Bulletin 99- 15,
Washington, D. C.: Apr. 5, 1999. 11 The Office of the Comptroller of the
Currency, National Credit Union Administration, Federal Deposit Insurance
Corporation, Federal Reserve Board, and Office of Thrift Supervision are the
federal entities that oversee the depository institutions that issue credit
cards.

Page 8 GAO- 01- 773 College Student Credit Cards

that although they have not focused bank examinations on credit cards issued
to college students, they do monitor and examine an issuer?s various credit
card portfolios- including a review of marketing and acquisition channels,
underwriting, and other risk management functions. The portfolio segment of
college students typically represented a small portion of the overall
portfolio and OCC is not likely to spend additional time on the college
student segment. OCC officials told us that if card issuer management
reports provided to OCC examiners showed that the college student segment
was a significant portion of the credit card portfolio and was growing
rapidly or experiencing performance weakness, OCC would devote more
resources to a review of the college student segment.

Bank regulators review banks? compliance with laws relevant to credit cards,
including regulations governing credit card disclosure and advertising. 12
The Truth in Lending Act, among other things, requires card issuers to
disclose key terms and costs in solicitations and applications to open
credit and charge card accounts, when an account is opened, and in billing
statements. Required disclosures include the periodic rate of interest that
will be applied to account balances- expressed as an annual percentage rate-
and an itemization of any other finance charges. Special requirements also
apply to credit advertisements. The Federal Reserve?s Regulation Z
implements the Truth in Lending Act. 13

The information we reviewed revealed consistent views of the advantages and
disadvantages associated with using credit cards. For those students who
manage their credit responsibly, credit cards provide access to credit and
payment conveniences. For those college students who do not manage credit
responsibly and have trouble repaying debt, the disadvantages of credit
cards can outweigh the advantages, and their credit card debt may be costly
and difficult to repay. Card issuers have used lower credit limits and other
techniques on a per card basis to constrain the amount of debt that college
students can accumulate.

12 Other federal laws and regulations relevant to credit cards are the Equal
Credit Opportunity Act, the Fair Credit Billing Act, the Fair Credit
Reporting Act, and the Fair Debt Collections Practices Act.

13 See 15 U. S. C. 1601 et seq. and 12 CFR 226.1. Credit Cards Have

Both Advantages and Disadvantages for College Students

Page 9 GAO- 01- 773 College Student Credit Cards

The information we reviewed indicated that college students want their own
credit cards, both for convenience and to establish a credit history. 14 The
conveniences that credit cards offer students include the following:

 ?Cashless? transactions,

 An interest- free loan from the time of purchase until the payment is due,

 Cash advances from automated teller machines,

 The ability to shop by telephone and on- line and make hotel reservations,

 The chance to purchase items that students might not have the cash to
purchase, and

 An instant source of credit that is available without filling out forms or
undergoing credit checks.

Several individuals we interviewed noted that credit cards provide some
financial security for students. Unlike cash, a lost or stolen credit card
can be replaced; and there are liability limits for fraudulent or
unauthorized charges. Credit cards also offer resources in case of
emergencies, such as a large car repair bill or airfare home during a family
crisis. Some parents approve of their college students having credit cards
because they see them as a tool for learning financial responsibility. Some
student group representatives and representatives of credit card issuers
cited free gifts or bonuses associated with obtaining a card and continued
credit card use as advantages to card ownership. Finally, some issuers
pointed out that monthly statements can serve as a financial record for
students and their families. Gifts or awards associated with credit cards
marketed to college students include cash rebates, magazine subscriptions,
coupons reducing the price of airplane tickets, discounts or free telephone
calls, points toward consumer products, and rebates for a car.

For some students, the disadvantages of having a credit card may outweigh
the advantages. Some consumer group representatives, debt counselors, and
university officials told us that students may not understand the
consequences of incurring excessive debt and making payments late. The
convenience of credit cards may tempt students to live beyond their means.
Consumer and credit counseling groups pointed out that excessive credit card
debt and late payments can impair a cardholder?s credit rating and make it
more difficult and costly to obtain

14 Credit files contain personal information such as date of birth and
employment information; credit history information, including loans, credit
limits, amount owed and late payments; public records, including court
judgments, tax liens, and bankruptcy; and a record of inquiries of who has
requested a copy of the report.

Page 10 GAO- 01- 773 College Student Credit Cards

credit in the future. Credit card issuers emphasize this same point in
information they make available to students. Many of these sources also
noted that students who pay only the minimum balance each month may not
understand the cumulative effect of interest rates. For example, a college
student with a credit card loan of $2,000 and an interest rate of 19 percent
who pays back the loan at $40 per month will incur interest charges of
$1,994 by the time the loan is paid in full. 15 At this rate, it would take
100 months, or over 8 years, to pay back the loan (table 1).

Table 1: Minimum Repayment Schedule on a $2, 000 Credit Card Loan at 19
Percent Monthly minimum payment amount

Number of months to pay

Total interest payment

$ 40 $100 $1,994 50 64 1,193 75 35 619 100 25 424

Source: Credit Card Minimum Payment Interest Calculator, Daniel C. Peterson,
www. webwinder. com.

Bankruptcy reform legislation that is currently pending before Congress
would require such an example to be included in credit billing statements,
but at this time no such disclosure is required. There was also general
agreement that students may find credit card debt and other debts harder to
repay upon graduation than they had anticipated. Parents of college students
may or may not have the financial resources to help these students reduce or
eliminate credit card and other debt. Some parents may have the resources to
help but choose not to provide financial assistance with debt because they
want their college student to learn a difficult lesson about financial
responsibility. According to the College Board, the average undergraduate
with student loans graduated owing $19,400 in 1998 to 1999. College
officials and debt counselors also told us that students may overestimate
their starting salaries and underestimate their living costs after
graduation. 16 According to a 1998 study of college

15 Minimum payments are typically 2 percent of the outstanding balance or
$10, whichever is higher. 16 Starting salaries ranged from about $23, 300
for psychology majors to about $42,800 for chemical engineering majors. See
The Education Resources Institute and the Institute for Higher Education
Policy, Now What? Life After College for Recent Graduates, Boston, August
1997. This study reports that the fastest- growing components of composite
debt of recent college graduates are student loans and credit cards.

Page 11 GAO- 01- 773 College Student Credit Cards

students and credit cards, the potential accumulation of high interest
payments on large amounts of credit card debt increases when

 four or more credit cards are owned,

 average credit card balances are greater than $1,000,

 balances are carried over each month, and

 tuition and fees are charged. 17 At the extreme, excessive credit card
debt combined with other financial problems 18 can lead to personal
bankruptcy, according to one credit counseling organization. 19

We were unable to determine the number of college students filing for
bankruptcy. U. S. Department of Education officials told us that they did
not track the number of college students filing for bankruptcy nor did they
know of any other organization or study that reported this information.
Officials of the Administrative Office of the U. S. Courts and the Executive
Office for U. S. Trustees, which have responsibilities regarding
bankruptcies, told us that their officials do not collect data on
occupational status, including whether someone is attending college. They
also told us that although those filing for bankruptcy are asked to report
their age and that age information, along with much other information
reported by bankruptcy applicants, is not systematically analyzed. American
Bankruptcy Institute officials told us that they did not know of studies
that tracked the college attendance or age of individuals filing for
bankruptcy. We did identify some unpublished academic research that included
data on age but not student status. The researchers collected demographic
data, including age, from bankruptcy applicants in 1999 and

17 See The Education Resources Institute and The Institute for Higher
Education Policy,

Credit Risk or Credit Worthy? College Students and Credit Cards, Boston, MA,
June 1998. 18 U. S. Department of Education officials told us that they did
not collect debt composition information- e. g., debt arising from credit
card use, automobile loans, and other sources of financial obligation- for
college students beyond debt arising from student loans. The Federal
Reserve?s Survey of Consumer Finance does not separate out college students
within the households from whom it surveys financial activities.

19 The two bankruptcy bills passed by the 107th Congress- S. 420 and H. R.
333- require the Board of Governors of the Federal Reserve System to study
the impact on bankruptcy of extending credit to dependents (defined
essentially as high school seniors and college students).

Page 12 GAO- 01- 773 College Student Credit Cards

during previous years. 20 Based on their data collection effort using a
questionnaire completed by 1,974 individual debtors filing for bankruptcy
during the first quarter of 1999 in eight federal judicial districts around
the country, the proportion of debtors in bankruptcy for selected age groups
during 1999 are displayed in figure 2. Fewer Americans under 25 filed for
bankruptcy in 1999 than those between ages 25 and 34 but more filed for
bankruptcy than those age 65 and older. The growth rate of bankruptcy
filings for people under 25 was greater than the growth rate for ages
between 25 and 34 but less than that for people in age ranges 35 and older
(see fig. 3). This data does not indicate how many individuals under 25 were
college students nor does it indicate what, if any, contribution credit card
debt made to these bankruptcy filings. Nonbusiness bankruptcy filings have
declined somewhat in the last two years from about 1.4 million in 1998, to
about 1.3 million in 1999, to about 1.2 million in 2000 according to the
American Bankruptcy Institute.

20 See Melissa Jacoby, Teresa A. Sullivan, and Elizabeth Warren, ?Rethinking
the Debates Over Health Care Financing: Evidence From The Bankruptcy
Courts,? 75 New York University Law Review, May 2001. See also Teresa
Sullivan, Elizabeth Warren and Jay Westbrook, The Fragile Middle Class:
Americans in Debt, Yale University Press, 2000.

Page 13 GAO- 01- 773 College Student Credit Cards

Figure 2: Proportion of Debtors Filing For Bankruptcy by Age Group

Source: Consumer Bankruptcy Projects II and III, 1991 and 1999.

Page 14 GAO- 01- 773 College Student Credit Cards

Figure 3: Percent Growth in Bankruptcy Filings By Age of Petitioner- 1991 to
1999

Source: Consumer Bankruptcy Projects II and III, 1991 and 1999.

Page 15 GAO- 01- 773 College Student Credit Cards

We identified three studies that provided some data on how college students
acquire and use credit cards and pay credit card debt. Two of the studies- a
survey sponsored jointly by The Education Resources Institution and
Institute for Higher Education Policy (TERI/ IHEP), 21 and a survey by the
firm Student Monitor 22 -used similar methodologies and generated similar
findings. The third study was conducted by Nellie Mae, a Sallie Mae
subsidiary that provides loans for higher education. This study covered only
a small group of students applying for a particular type of loan, and its
findings differed from those of the other reports, which covered a broader
and more typical population of college students. The Nellie Mae study showed
more students owning credit cards and a higher average level of credit card
debt. All three studies had generally sound methodologies but with some
limitations: the TERI/ IHEP and Student Monitor studies relied on self-
reporting and were subject to nonresponse from sampled students, and the
Nellie Mae study covered only a small pool of students who were trying to
get a particular type of loan.

The TERI/ IHEP and Student Monitor surveys drew statistically valid samples
that were representative of a broad college student population in the United
States. The TERI/ IHEP study, published in June 1998, was a telephone survey
of a random sample of 750 college students drawn from a commercially
available list. 23 The Student Monitor study conducted in spring 2000, was
based on in- person interviews with 1,200 randomly selected college students
from 100 universities around the country. The schools were selected to
provide a representative sampling based on

21 TERI is a national not- for- profit organization that guarantees student
loans and performs education policy and research activities. IHEP is a not-
for- profit organization that fosters access to and quality in post-
secondary education through research and policy analyses, among other
efforts. The TERI/ IHEP study was conducted in part to understand the debt
levels graduating students have accumulated- especially the level of credit
card debt in relation to student loan debt.

22 Student Monitor is a firm that surveys college students on issues such as
lifestyles and the media, automotive, computers and the Internet, and
financial services and telecommunications. Companies (including credit card
companies) can subscribe to the surveys and use this information to market
specific products to college students.

23 Fifty- nine percent of the respondents attended 4 year institutions, 29
percent were enrolled in 2 year institutions or trade schools, and 11
percent attended graduate or professional schools. Seventy- eight percent of
survey respondents were younger than age 24. The TERI/ IHEP results that we
report differ from the results of the TERI/ IHEP study itself, because,
where possible, we excluded part- time students. Part- time students may be
older than 21 years of age or working full time. Studies Provide

Limited Information on College Students and Credit Cards

The TERI/ IHEP and Student Monitor Studies Had Similar Methodologies and
Limitations

Page 16 GAO- 01- 773 College Student Credit Cards

location, type of higher education institution (public or private), and
enrollment. Figure 4 compares results of the two studies in key areas.

Figure 4: Comparison of TERI/ IHEP Study and Student Monitor Study Results
on College Student Credit Card Acquisition and Payment

Source: TERI/ IHEP and Student Monitor studies.

These two studies had an important limitation: they were based on
information reported by the students themselves and were not designed to
verify that information. Some researchers maintain that respondents
sometimes underreport the quantity or level of characteristics that could be
considered unflattering. Despite this and other limitations (such as a
reliance on memory and nonresponse of part of the sample), these two studies
provide the best data currently available for a broad population of college
students. Appendix I contains more information about the methodology and
findings of the studies, and appendix III describes other

Page 17 GAO- 01- 773 College Student Credit Cards

studies we identified on college students and credit cards but which are not
discussed in the body of the report because of more pronounced
methodological limitations.

The TERI/ IHEP and Student Monitor studies found that nearly two- thirds of
all college students had at least one credit card in their name (fig. 5).
Between 6 and 13 percent of college students had four or more credit cards.
According to the Student Monitor study, more than half of the students
reported credit limits of $1,001 to $5,000, and the TERI/ IHEP study
reported that 24 percent of students had total combined credit limits of
more than $5,000 (fig. 6). Figure 6 depicts higher credit limits for the
majority of students surveyed in the TERI/ IHEP study (a combined total of
51 percent reporting credit limits of $2,001 or more compared with 30
percent of students surveyed by Student Monitor). The difference may be
explained by the difference in the samples used in each study. The TERI/
IHEP sample of students included 11 percent who were graduate or
professional school students. Because these students are likely to be older,
they may have the resources to qualify for higher credit limits. The TERI/
IHEP study also included 29 percent who were at 2- year schools. More of
those students may have been working full time and have had the resources to
qualify for higher credit limits. Most College Students Had

Credit Cards and Most Had Combined Credit Limits of Less Than $3,000

Page 18 GAO- 01- 773 College Student Credit Cards

Figure 5: Number of Credit Cards in Students? Name

Source: TERI/ IHEP and Student Monitor studies.

Page 19 GAO- 01- 773 College Student Credit Cards

Figure 6: Credit Limits on College Students? Cards

Source: TERI/ IHEP and Student Monitor studies.

Survey results indicated that college students got their credit cards from a
variety of sources. According to the Student Monitor study, 36 percent of
students obtained their cards by responding to mail offers, 15 percent by
filling out an application from a display on campus, and 14 percent by
applying at a bank. Smaller percentages came from tabling and off- campus
displays (6 percent each); telephone solicitation (4 percent); and 800
telephone numbers, internet advertising, and applications placed in a
college bookstore bag or college publication (8 percent combined). The TERI/
IHEP study reported that 37 percent of college students got their first
credit card through a mailing, 36 percent through an application at a
business, 24 percent from an on- campus representative or advertisement, and
3 percent from other sources. This study also reported that 63 percent of
the students obtained their first credit card by applying on their own.
Another 18 percent reported that their first credit card was obtained from
Mail Solicitation

Accounted for More Than One- Third of College Students? Credit Cards

Page 20 GAO- 01- 773 College Student Credit Cards

their parents; 14 percent said it was sent in the mail, and 4 percent
received a first card by other methods.

Many of the students responding to both the Student Monitor and the TERI/
IHEP surveys had credit cards as freshmen. Almost half of those responding
reported getting a bank credit card during their freshman year, but a
sizable minority said they already had credit cards when they entered
college. According to the Student Monitor Study, 46 percent of college
students obtained credit cards during their freshman year, 20 percent after
high school but before college, and 14 percent in high school. Fourteen
percent acquired a credit card during their sophomore year of college and 5
percent after their sophomore year of college. Among the students surveyed
by TERI/ IHEP, 55 percent reported receiving credit cards in their first
year of college. Another 25 percent said they got their first credit card in
high school, while 10 percent received theirs as sophomores and 10 percent
after the sophomore year.

The two surveys showed that college students used their credit cards for a
broad range of items. Students responding to the TERI/ IHEP study said that
the most common items for which they used credit cards were routine personal
expenses such as food, clothing, and entertainment (77 percent); occasional
and emergency expenses (67 percent); and books and school supplies (57
percent). Only 12 percent used credit cards to pay tuition and fees 24 , and
just 7 percent used them for room and board. Of the students who did charge
their tuition and fees, over half (57 percent) paid the charges in full
right away. Of survey respondents with credit cards, 44 percent said that
credit cards were used for living expenses, 24 percent said they were used
for large occasional purchases or health care, and 22 percent said they were
used for education related expenses such as tuition, fees, books, and
supplies. Student Monitor asked students how they typically paid for certain
goods and services. Of students who purchased airline tickets, 61 percent of
the students surveyed reported paying for airline tickets with credit cards.
Thirty- three percent said they used credit cards to pay for car repairs,
and 21 percent said they paid tuition with credit cards. College students
charged an average of $127 a month in 2000 according to Student Monitor.

24 This question was asked of those students who reported that their schools
allowed credit card payment of tuition and fees or who did not know their
school?s policy. College Students Used

Credit Cards to Pay for a Variety of Items

Page 21 GAO- 01- 773 College Student Credit Cards

Four credit card issuers provided us with data that showed the items college
students charge most frequently (fig. 7). 25 Their data show that the top
categories of spending for the most recent 12- month period available were
gasoline and other service station goods and services; mail order,
telephone, and Internet charges; and food, clothing, and other retail
expenses. Two card issuers noted that the spending patterns of their college
student customers were similar to nonstudents of a similar age or their
general customers, but two other issuers reported that ?education? as a
spending category was the fourth most frequent spending category. One card
issuer noted that data on the types of charges came from the stores where
the items were bought and the charges were often not broken down into
specific items. For example, department store charges could represent
clothing, cosmetics, or household items, while university bookstore charges
could include books, clothing, or athletic supplies.

25 Two issuers declined to provide the data- one issuer said they did not
have aggregate transaction available and another said the data was available
but not pulled on an on- going basis for the student market. Card issuers
used different categories, and some companies provided more detail than
others. This information reported by the card issuers is not comparable with
the data from the two studies.

Page 22 GAO- 01- 773 College Student Credit Cards

Figure 7: Categories of College Student Credit Card Charges

Note: Categories at top of figure are more frequently charged than
categories at bottom of figure. Source: Responses of four credit card
issuers to GAO request for data.

Most of the students who responded to the two surveys said that they paid
their own monthly credit card bills and that they paid their balance in full
each month. Eighty- six percent of the students interviewed for the TERI/
IHEP study said they paid their own bills. Eighty- three percent of students
with a card in their own name reported paying their own credit card bill,
according to Student Monitor. Fifty- nine and 58 percent of the students
surveyed in the studies reported that they paid their monthly bill in full.
Eighty- two percent of the respondents who carried a balance said they
typically paid more than the minimum amount due according to the TERI/ IHEP
study. According to the Student Monitor study, the reported average monthly
balance of the 42 percent who carried debt was $577, and 16 percent of those
carrying a balance from month to month were running a balance of more than
$1, 000 (fig. 8). The TERI/ IHEP study did not report an average monthly
balance but did report balances according to dollar ranges (fig. 9). Most
Students Did Not

Carry a Credit Card Balance

Page 23 GAO- 01- 773 College Student Credit Cards

Figure 8: Average Monthly Balances on Student Credit Cards for Students Who
Carry a Balance, Reported in the Student Monitor Study

Source: Student Monitor.

Page 24 GAO- 01- 773 College Student Credit Cards

Figure 9: Average Monthly Balances on Student Credit Cards for Students Who
Carry a Balance, Reported in the TERI/ IHEP Study

Source: TERI/ IHEP study.

The Nellie Mae study, published in December 2000, differs from the other two
studies in its scope, methodology, and findings. 26 The study covers only a
subset of college students who applied for a particular loan product and was
not projectable to a national college student population. Nellie Mae drew a
random sample of 256 undergraduates from its nationwide group of 1, 065
students who applied for private loans for educational expenses early in
2000. These students either did not qualify for federal student loans or had
already received the maximum amount available to them. The methodology is
unique among the three reports (i. e., the study relies on information from
credit bureaus and not on information provided by the students themselves).
Credit bureaus receive information for

26 Nellie Mae, ?Credit Card Usage Continues Among College Students,?
Braintree, MA, Dec. 2000. The Nellie Mae Study

Differed From the TERI/ IHEP and Student Monitor Studies

Page 25 GAO- 01- 773 College Student Credit Cards

customers, including credit card issuers, banks, and other entities that
extend credit. 27

The Nellie Mae study reported that 78 percent of students in the sample had
credit cards; the average number was three cards per student. The percentage
of college students with four or more cards (32 percent) was higher than in
the TERI/ IHEP survey. In general, the Nellie Mae study reported higher
levels of debt than the TERI/ IHEP and Student Monitor studies. Nellie Mae
reported an average credit card debt for those with a balance of $2,748.
Thirteen percent of the students in its sample carried credit card balances
of $3,000 to $7,000, and 9 percent had balances of more than $7,000. There
are two possible reasons for the differences in the average level of credit
card debt reported in the TERI/ IHEP and Student Monitor studies, and the
Nellie Mae study. First, students in the first two studies could have
underreported their credit card debt. Second, because the students in the
Nellie Mae study were drawn from a small pool of loan applicants, they were
not representative of the college student population as a whole.

The universities we visited took different approaches to on- campus
solicitation by credit card issuers. 28 Some universities had campuswide
policies that affected all organizational components, while others allowed
nonacademic entities- student unions, bookstores, athletic departments, and
alumni associations, for instance- to set their own policies. Only 1 of the
12 universities we visited prohibited credit card solicitation altogether,
and just 2 others (both state universities) had relatively strict
prohibitions, based in part on state laws. 29 At these two universities,
commercial

27 This study did not screen out co- signed cards but did screen out
students who were only authorized users of credit cards- e. g., credit cards
in the name of the parent and given to the college student to use.

28 None of the universities we visited had student identification cards that
could be used as credit cards. Nine of the 12 universities, however, had
identification cards with a debit feature that allowed students to make some
on- campus purchases and, in a few cases, limited- off campus purchases.

29 These laws prohibit commercial solicitation and transactions and displays
of property or services for sale on a campus, except with the written
permission of the campus president. Permission is granted if the proposed
activity (1) aids in the achievement of the educational objectives of the
campus, (2) does not unreasonably interfere with the operation of the
campus, and (3) is not prohibited by law. This test must be applied equally
to all vendors and not selectively to certain types of vendors, such as
credit card companies. Universities? Policies

on Credit Cards Differ, But Most Focus on Solicitation

Page 26 GAO- 01- 773 College Student Credit Cards

vendors were either prohibited from soliciting on campus or allowed to
distribute but not collect credit card applications. The remaining nine
universities allowed each university entity to set its own policies. At most
of the universities we visited, tabling at student unions and aggressive
marketing by vendors hired by credit card issuers created the most
controversy. Most of the bookstores we visited were run by national
corporations or operated independently of the university and tended to
adhere to their own policies. While only a few of the athletic departments
were involved in credit card solicitation, alumni associations often
established relationships with credit card issuers to raise funds. Partly in
response to criticism of university involvement with credit card
solicitations, most of the universities we visited offered nonacademic
instruction in personal finance. Figure 10 shows credit card marketing
efforts and other characteristics of the universities visited. In addition,
some credit card companies made changes in how they provide disclosure
information and some adopted standards for campus solicitation.

Figure 10: University Policies on Credit Cards

Note: A checkmark indicates that the activity takes place. a Undergraduate
enrollment numbers are rounded to the nearest thousand.

b Although credit card vending is allowed, the university prohibits vendors
from taking completed credit card applications from students on- campus.
Completed applications from students on- campus must be mailed to the credit
card companies. c Only students are permitted to staff the tables at the
student union.

d Alumni affinity relationship is in conjunction with the university?s
athletic affinity card. Source: GAO interviews with university officials and
Web site data.

Page 27 GAO- 01- 773 College Student Credit Cards

Complaints about the marketing practices of credit card vendors at student
unions have influenced universities? policies on solicitation. Student union
administrators from some universities we visited cited marketing incentives
(in the form of free gifts) as the most frequent source of complaints. 30
These concerns led three universities to prohibit the use of such incentives
with credit card applications. One student union administrator complained
that the vendors created a ?carnival

atmosphere? with loud music and games, noting that ?the incentives, along
with the party atmosphere, masked the responsibilities of owning a credit
card,? especially since there was no discussion of the consequences of
misusing a credit card. Two officials from a state student association
feared that using incentives could lead to potential abuses. One stated that
credit card vendors pressured students to sign up for free gifts and that
the students would then reveal personal information for gifts, such as a
squeeze ball.

Instances of aggressive solicitation and the presence of many credit card
solicitors in student unions also generated controversy at some
universities, leading to more restrictive solicitation policies. Credit card
companies pay the vendors according to the number of completed applications
secured from students. The vendors we contacted declined to provide us
information about how much they are paid for completed applications.
Officials at several universities said students had a variety of complaints.
For instance, students complained that vendors created a

?hawking atmosphere,? were ?out of control,? and were often ?in [our] face.?
An official said that some college students complained that vendors followed
them after they had refused the credit card application. Some of the
universities we visited had tailored their solicitation policies to address
these concerns, and some had imposed stricter limits. At one university,
students voted to ban credit card vending in the student union altogether.
Other universities restricted tabling to specific days or increased the fees
for vending. One university limited tabling to three times per week and
required that the tables be staffed only by students, effectively ending
credit card solicitation at the student union. One credit card vendor told
us that they reimbursed student groups based either on an hourly rate, a
flat fee, or a fee based on the number of completed applications. A
different credit card vendor told us that they pay student

30 The gifts included inexpensive items, such as t- shirts, compact discs,
water bottles, and squeeze balls. Complaints About

Aggressive Marketing at Student Unions Have Led to New Policies

Page 28 GAO- 01- 773 College Student Credit Cards

groups between $25 and $200 a day to table credit cards as well as $1 to $5
for each completed application.

Complaints that credit card marketing efforts were not adequate or helpful
in teaching responsible credit card use also affected solicitation policies
at some universities. As noted previously, federal law requires written
disclosure of key terms when credit is applied for and extended. Officials
and students at several of the universities we visited complained that when
soliciting credit card on campus, credit card vendors did not discuss or
bring to the attention of students key credit card terms such as available
interest rates or penalties that are in written disclosure documents. They
also said credit card vendors did not provide information on the
consequences of nonpayment. For example, an official of a state student
association said students are not told about possible consequences, such as
the impacts of a bad credit record. In response to such complaints, two
universities among those we visited began requiring credit card vendors to
hand out additional credit education information along with credit card
applications and three began offering debt education presentations. These
universities had both centralized and decentralized policies regarding
solicitation.

Some policies responded to the ideological views and financial needs of
student groups. A student union official at one university told us that the
student culture was against commercialism and critical of corporate
sponsorships. The university?s three student unions had taken this viewpoint
into account in banning commercial solicitation, including credit card
solicitation. But other universities chose to consider the financial needs
of student groups in formulating their solicitation policies. For example,
student unions at five universities allowed student groups that relied on
funding from credit cards to sponsor credit card vendors; these were the
only vendors allowed to solicit. At one of the universities we visited
credit card vendors paid $4,359 to five Greek organizations, and one other
student organization, over the course of 3 academic years with one Greek
organization receiving $2,370 in payments for credit card solicitation.

Some credit card issuers noted that they had responded to concerns about
aggressive marketing in two ways: by supplementing disclosure information
and by creating a code of conduct for on- campus marketers. Issuers told us
that they provide disclosure information to college students

Page 29 GAO- 01- 773 College Student Credit Cards

both when soliciting and when credit is extended. 31 They include disclosure
information on the application or in a separate handout applicants can keep
for reference. Several issuers told us that they have the same disclosure
guidelines for students and nonstudents.

Several card- issuing financial institutions, as well as MasterCard and
Visa, developed the code of conduct for on- campus credit card solicitation
in 2000 (appendix IV). The code, which applies to tabling companies and
their representatives (vendors), aims to promote both responsible marketing
practices on college campuses and responsible credit card use by students.
An official with MasterCard International told us that as of March 2001, six
of the largest credit card issuers had adopted the code of conduct. Two
tabling companies specializing in college marketing told us that they also
adhere to the code of conduct. The tabling companies also had procedures in
place for responding to complaints about their representatives, including
referring complaints directly to the issuer and retraining or terminating
vendors. One tabling official said that the majority of credit card issuers
they work with used quality control checks that included inspecting booths
and applications and surveying applicants by telephone.

Nine of the university bookstores we visited either operated independently
of the university or were managed by national corporations. Seven of these
bookstores did not receive operating funds from the university and eight had
developed their own solicitation policies. Some bookstore managers told us
they must find sources of revenue to help cover costs. Several bookstores
allowed tabling and other forms of solicitation, including countertop
brochures and applications in textbooks and shopping bags. The stores were
rewarded for each credit card application they submitted to the issuer or
received credit against advertising costs. Applications inserted in shopping
bags often helped reduce the cost of the bags. One corporation developed
their solicitation policies with input from store managers and school
officials.

Bookstore officials told us that that tabling was a more limited activity
than other forms of solicitation, including placing applications in shopping

31 State laws and Regulation Z of the Federal Truth in Lending Act require
lenders provide customers with information on the terms of the credit,
including the interest rate and minimum monthly payment. Lenders must
disclose the terms during solicitation and after an application has been
accepted. Most Bookstores Are

Privately Managed and Have Their Own Solicitation Policies

Page 30 GAO- 01- 773 College Student Credit Cards

bags or displaying countertop brochures. Some bookstores had exclusive
arrangements with one credit card company that was allowed to table on
certain days. One bookstore (owned by the university but independently
operated) required credit card vendors to provide consumer education
information during tabling events. Another adhered to a university policy
banning free gifts as incentives for applying for a credit card.

Athletic directors at several of the universities we visited told us that
athletic departments engaged in fund- raising activities to help support
athletic scholarships and programs. But only two athletic departments had
credit card relationships. Some athletic departments engaged in more
extensive fund- raising activities than others, particularly some
departments at universities classified as Division I in the National
Collegiate Athletic Association. These departments in some cases had
separate arrangements with corporate sponsors and credit card banks and
allowed spot announcements, signage, and credit card tabling at sporting
events. In contrast, one athletic department at a Division III university we
visited was relatively small and did not rely on credit cards or private
sources for funding. Some athletic departments had contracts with issuers
that allowed tabling, and two Division I universities had affinity
relationships with credit card issuers. One official at a Division I
university that had an affinity relationship said that the revenue the cards
generated was only a small part of the department?s overall budget and went
directly into its general fund.

Alumni associations at most of the universities we visited sought additional
revenue sources through relationships with credit card issuers. Eleven of
the 12 associations we spoke with had affinity relationships with credit
card issuers that generated substantial income. Alumni association officials
told us that credit card issuers offered a flat fee or a lump sum plus
royalties for completed credit card applications from association members or
a percentage of the total charges made on affinity credit cards. Officials
further told us that the income the associations received from the credit
card issuers provided significant support for both the associations?
programs and the universities. Income from the affinity agreements was used
to cover such things as the associations? budgets, university operating
costs, scholarships and mentoring, and long- term projects, such as the
construction of new buildings. According to alumni association officials,
their contracts with the credit card issuers precluded disclosure of the
terms and condition of the agreement including information on payments made
to the alumni association. Athletic Departments May

Have Credit Card Relationships

Alumni Associations Often Had Relationships With Credit Card Issuers

Page 31 GAO- 01- 773 College Student Credit Cards

In general the alumni associations determined how the companies could market
the cards. Most of the associations permitted credit card issuers to solicit
members through mailings and telephone calls. Still others allowed
solicitation in the form of tabling at sporting events, alumni gatherings
and other special occasions, or at the student union. While tabling was
permitted under some agreements, several alumni association officials
mentioned that credit card issuers were no longer tabling.

The associations also decided which members could be the focus of marketing.
Generally this group included the alumni themselves and sometimes student
members of the associations. For example, officials from four of the seven
alumni associations with student members told us that their associations did
not permit soliciting of students. The other two alumni associations
permitted solicitation of student members, either by mail or by mail and
telephone. Several of the alumni associations told us that they had the
right to approve the marketing language used in marketing materials.
According to alumni officials, few students held affinity credit cards.
Officials from five alumni associations told us that students were a small
percentage of their alumni affinity cardholders (1 to 10 percent of the
total credit card holders).

Some universities had responded to the increase in student credit card use
and on- campus solicitation by offering students financial education and
counseling. Ten of the 12 universities we visited provided some form of
financial education instruction, and some had credit counseling services or
referred students to outside services (fig. 11). Universities Also Offered

Financial Education and Credit Counseling

Page 32 GAO- 01- 773 College Student Credit Cards

Figure 11: Universities? Financial Education Programs

a Includes financial presentations provided by on- campus credit unions.
Source: GAO interviews with university officials.

Financial education instruction was often part of freshmen orientation
programs. The head of the collections department at one university, for
instance, told us that the orientation program included a discussion on
budgeting and the responsible use of credit cards. She explained that the
university saw its efforts to balance credit card tabling with debt
education as a way to help keep students out of debt. Another university
covered credit card use in its summer orientation for the same reason. Two
universities, both with decentralized policies regarding solicitation of
students, had bankruptcy attorneys available to offer advice or information
to students on their credit rights, and one had a presentation at the
beginning of each academic year, provided students information on credit
card use and the potential for financial trouble. All of the universities we
visited that provided financial education instruction had voluntary
programs, but some officials felt that this instruction should be mandatory
given that many parents had not taught their children how to manage money.

Page 33 GAO- 01- 773 College Student Credit Cards

We asked officials at the three universities that provided advice or
information from bankruptcy attorneys or credit counseling services if they
had any statistics on the extent to which students using these services had
problems with credit card debt and how many had filed for bankruptcy. While
all three universities did not have data on these issues a bankruptcy
attorney representing one of the universities did. At one university with an
undergraduate enrollment of about 10,000, the student association retained
an attorney to provide general and financial advice to students. The
attorney, who specialized in bankruptcy issues, stated that credit card debt
was a primary concern of students seeking his advice. According to the
attorney, over the 3 years since April 1998, approximately 1,328 students
had utilized the legal service and of this number, 255 students had sought
advice on credit card debt issues. The credit card debt of these students
ranged from about $2,100 to nearly $39,000, with an average of approximately
$11,200. The attorney told us that the younger college students tended to
have less debt than the college students who are older than age 23. He said
that about half the college students he sees are over age 23 and that the
individuals with 6 or 7 credit cards and the highest levels of credit card
debt come from this subgroup. The attorney stated that in some cases, after
paying tuition, students had used any excess financial aid to pay their
credit card debt. Further, during the last 3 years, 83 students using the
legal service had filed for bankruptcy.

We asked officials at the 12 universities we visited whether or not they
collected information on why students leave their universities prior to
graduation, the extent to which this information identified whether credit
card debt was an explanatory factor, and the opinions of university
officials on whether credit card debt was a factor in college withdrawal.
Officials at five of 12 universities we visited collected information on
student withdrawals but they did not specifically ask the students to report
whether credit card debt was a factor in their decision to leave. Officials
from three of these universities told us that credit card debt was not
generally cited by students as a reason for their decision to withdraw. Even
so, officials from four universities, including two of the universities that
did and two that did not collect student withdrawal information, told us
that they thought students would not report credit card debt as a reason for
deciding to withdraw unless the university specifically asked. Nevertheless,
7 of the 12 universities we contacted cited financial concerns, including
credit card debt, as possible reasons why students decided to leave.
Officials from 4 of the 12 universities stated that they did not sense that
credit card debt was a major factor in a student?s decision to withdraw.
Officials from 9 of the 12 universities offered a variety of Credit Card
Debt As A

Reason For Leaving College

Page 34 GAO- 01- 773 College Student Credit Cards

other reasons why students decide to withdraw. Among these reasons were the
need to work more hours, family medical problems or health, homesickness,
cultural concerns, academic difficulties, career changes, marriage, divorce,
and pregnancy. Our review of academic research related to students leaving
college indicated that financial factors are some of the many factors that
college students and researchers cite as reasons for leaving college prior
to graduation. We did not find evidence that the research examined the
extent to which credit card debt was a contributory factor to students
leaving college. One researcher said that financial considerations appear to
be but one part of a complex decisionmaking process, one that depends in
large measure upon the nature of the student?s social and intellectual
experiences within the college- especially the daily interactions between
students and faculty both inside and outside the classroom. 32

We surveyed 10 credit card issuers, 6 of which responded, and talked with
industry officials. In our survey and discussions with credit card issuers,
we found that issuers had a variety of business practices directed toward
college students. Some issuers wanted to market to college students because
most college students have some income and lower living expenses compared to
non- students. College graduates were also attractive because they had
higher earning potential than nonstudents, and students continue to use
their cards after college. Issuers told us that they had several methods of
marketing to college students, including direct mail, the Internet, and on-
campus displays. Most of the issuers that marketed to students said they
customized their underwriting standards for college students. For example,
one issuer told us that the college a student attended was more important
than whether or not the student was employed. Interest rates on the credit
cards offered to college students were tied to the prime rate, students?
credit ratings, or other factors. 33 Half of the issuers we contacted said
that they charged college students the same late fees as other customers.
They said credit limits were smaller overall and were adjusted according to
factors such as year in college and whether or not the student had a
checking or savings account at the card

32 See Vincent Tinto, Leaving College: Rethinking the Causes and Cures of
Student Attrition, University of Chicago Press, 1993. 33 The prime rate is
the base rate that banks use to price commercial loans with short maturities
for the most creditworthy customers. Card Issuers

Customize Business Strategies for College Students

Page 35 GAO- 01- 773 College Student Credit Cards

issuer?s bank. Card issuers also said they tried to help students who were
delinquent in their payments by providing counseling or referrals to credit
counseling services. They also told us they developed credit information
materials and supported financial literacy and debt counseling
organizations. Appendix V lists the questions we asked the issuers.

Card issuers market to college students because most have some income.
According to the Student Monitor study, 55 percent of students said they
worked part time, and 9 percent said they worked full time, in 2000. The
students reported their mean annual earnings at around $4,550. For the
approximately 58 percent of college students who said they received money
from home each month to help meet their expenses, the average amount
received from home was about $300. Students reported that they had an
average of $195 available for discretionary purchases each month. 34
Bachelor?s degree recipients earn 75 percent more on average than those with
only high school diplomas and over a lifetime the gap in earning potential
between a high school diploma and a Bachelor?s degree or higher exceeds $1
million, according to the College Board. 35 Two issuers told us that they
marketed to students because of the long- term profitability of the college
student market. One of these issuers noted that credit cards issued to
college students were not as profitable as those issued to nonstudents; but
once the students graduated, their cards became more profitable than
nonstudents? accounts. This issuer, who had affinity relationships with
sports teams, professional groups, and cause related groups, told us that
their college student accounts accounted for 15 percent of their affinity
cardholders.

Some credit card issuer?s marketing was directed at college students through
affinity relationships. Universities or their components received funds from
the card issuer- either a flat fee or an amount based on factors such as the
number of cards issued or monthly charges to the cards. One card issuer that
sought affinity card relationships told us that the company marketed to
college and universities ranked highly on academic competitiveness measures
and that alumni of the top- rated schools managed their credit responsibly.
The issuer added that most of the

34 Discretionary purchases are expenditures after college students have
covered tuition, room, board, books, and fees. 35 The College Board is a
membership association of more than 3, 800 schools, colleges, universities,
and other educational associations. Card Issuers Market to

College Students Because They Are Good Customers

Page 36 GAO- 01- 773 College Student Credit Cards

company?s affinity relationships were with universities that allowed the
company to use all marketing channels.

Card issuers used a variety of methods to market to students, including
direct mail, tabling, relationship banking, the Internet, and displays on
college campuses known as ?take- ones? (fig. 12). Direct mail was a method
of marketing to college students for five of the six issuers who responded
to our questions about marketing practices. One of these four issuers told
us that direct mail and telesales accounted for more than three- quarters of
their college student accounts. 36 On- campus tabling was the most visible
marketing method, and three of the issuers used tabling on and off campus
including at athletic events. 37 Two of the issuers used their branch banks
as the primary method of marketing to students, offering credit card
applications to students who opened checking accounts and received automated
teller cards. All the issuers allowed college students to apply for credit
cards through their Internet sites, and students could also apply for the
credit cards of the financial institution members of Visa and MasterCard
through the Visa and MasterCard Web sites. Only one of the issuers told us
that they had an 800 telephone number that students could call to apply for
a credit card.

36 One issuer told us that their mail marketing yielded about 1 percent card
issuance and that about 9 out of 10 of their college student accounts come
through mail marketing. 37 One of the issuers did not mention their campus
tabling activity although we observed them tabling credit cards and other
financial services on one university campus.

Page 37 GAO- 01- 773 College Student Credit Cards

Figure 12: Credit Card Issuers? Marketing Methods

Source: Responses of six card issuers to GAO request for data.

Four issuers told us that they customized their underwriting standards for
college students, eliminating standard income and employment requirements.
The first issuer told us that the company had a unique experiential
scorecard for the college market with no income or employment requirement.
38 Extensive experience with college students enabled the company to predict
good credit performance based on selective marketing, a credit bureau
evaluation, and careful management of the account once the card was issued.
This issuer?s college student accounts compared favorably with traditional
accounts. The second issuer had two sets of criteria for college students,
one for students with credit histories and another for those with no credit
records. College students with credit files were judged on the basis of
ability, stability, and willingness to repay. Applications from students who
did not have credit files were judged according to their source- that is,
whether they came from a university that had an affinity relationship with
the card issuer. This issuer told us that the company rejected most
applications from college

38 A scorecard is a table listing the characteristics that provide
predictive information, the attributes of each characteristic, and the
number of points associated with each attribute. See Edward M. Lewis, An
Introduction to Credit Scoring, San Rafael, CA, Athena Press, 1994. Card
Issuers Customized

Underwriting Standards for College Students

Page 38 GAO- 01- 773 College Student Credit Cards

students. Reasons for denial included that the college students already had
credit available, had histories of delinquency, or had too little income.

The third issuer told us that the company had a specialized scorecard for
college students that took into account limited employment history and other
factors that set students apart from the nonstudent population. 39
Employment history, salary, credit reports, credit need, and ability to pay
were important elements in the credit decision; the company also considered
year in college and grade point average. This card issuer said that
underwriting standards for other customers with characteristics similar to
those of college students (e. g., customers with little credit experience)
varied only in terms of the importance placed on income and credit history.
The fourth issuer told us that the company?s underwriting standards required
that college students be enrolled in a 2- or 4- year college or a graduate
institution; be 18 years of age; be a U. S. citizen; have a minimum monthly
discretionary income of at least $200 after rent, tuition and food are paid
for; pass scorecard approval criteria; and not have an existing credit card
account at that bank. For this card issuer, employment was not a
requirement, but an existing credit history and a demonstrated ability to
pay debts were. Again, income and credit histories were more important
factors for nonstudents. This issuer told us that its college student
portfolio was typically a low- risk portfolio, because most applications
came from the company?s banking centers rather than from on- campus
marketing efforts.

Of the two remaining credit card issuers that responded to our request for
information about their underwriting practices, one declined to provide
information, except to tell us that the risk adjusted performance of their
student portfolio was comparable to new credit customers. The remaining
issuer told us that its underwriting process was no different for college
students than it was for any other customer. This company said that it used
all available relevant information to create the most accurate risk
assessment possible and accepted only applicants that were judged to be good
risks.

39 The Equal Credit Opportunity Act allows creditors to consider an
applicant?s age for the purposes of assessing the amount and probable
continuance of income and credit history.

Page 39 GAO- 01- 773 College Student Credit Cards

The terms and conditions some credit card issuers applied to college student
credit cards differed from the terms and conditions companies offered their
other customers (fig. 13). Two card issuers, however, treated college
students the same as other ?new- to- credit? customers. Most card issuers
told us that they charged college students a variety of interest rates,
depending on the prime rate, credit experience, and other factors. One
issuer charged college students interest rates based on the prime rate plus
additional interest of between 6.9 and 10.9 percent. Another issuer charged
students interest rates ranging from 13.9 percent to 19.8 percent, depending
on credit experience. One issuer charged students different interest rates
depending on the source of the application (for instance, mail, Internet, or
campus tabling), whether or not the student had a credit history, and the
type of card issued. 40 Another issuer charged a flat rate of 15.99 percent.

Figure 13: Credit Card Terms for Students and Nonstudents

Note: N/ A represents not available in information provided. Source: GAO
analysis based on information provided by credit card issuers.

Most card issuers told us that the interest rates they charged varied across
customers, including college students. One issuer told us that the range of
interest rates for student credit cards was wider than the rates charged for
customers with established credit histories and pristine payment records.
Another issuer told us that the margin they added to the prime rate for
college students was between 6.9 and 10.9 percent and that this range for
nonstudents varied, depending on the type of credit card the college

40 Some cards offered cash back, points toward products, rebates toward a
car purchase, airline savings certificates, and other benefits. Many Issuers
Adjust the

Terms and Conditions of Credit Cards for College Students

Page 40 GAO- 01- 773 College Student Credit Cards

student had. For example, platinum, gold, and classic cards had a range of
2.9 percent to 12.9 percent over the prime rate, while a ?reward card? had a
range of 8.99 percent to 12.99 percent over the prime rate. Two issuers told
us that their student rate was consistent with those offered to nonstudents
with similar risk profiles- typically customers with little credit
experience.

Five issuers told us that they set special low credit limits (between $200
and $2,000) for college students and adjusted these limits upward over time
if the student?s credit performance was satisfactory . 41 One issuer told us
that the factors considered in raising credit limits included the length of
time the account had been open, how it had been used, and the payment
history, regardless of account type, while another issuer set credit limits
according to the students? year in school ($ 700 for freshmen and
sophomores, $800 for juniors, and $900 for seniors). They said that
creditlimit increases were granted only to select customers who had
demonstrated financial responsibility and were at low risk of default in the
future. Students who maintained a banking relationship with this issuer were
given higher credit limits. This issuer said that in general it gave
nonstudents higher credit limits and ?more aggressive? increases than
students. Two other issuers set credit limits for college students at
anywhere from $200 to $2,000, depending on factors such as credit
experience, past performance, class year, and creditworthiness. One of these
issuers said that credit line increases were based on factors such as
payment history, account use, and external revolving debt. Still another
issuer set even stricter credit limits for college students (from $500 to
$1,000) and did not offer increases until a year after the card had been
issued (the increases were generally $500 or less).

Most of the card issuers in our study told us that they either provided
credit counseling for college students who had trouble making payments or
referred these students to credit counseling services. One issuer told us
that they were willing to help students by lowering interest rates and
adjusting payment schedules. The issuer said that when an account was
delinquent, they worked with the student to determine the cause of the
problem and take appropriate action. Another issuer told us that although

41 A credit card industry official told us that in the past many credit card
issuers had approved large credit limits for college students but were now
limiting credit to students in smaller amounts. Card Issuers Have

Programs Designed to Assist College Students and Educate Them About Credit

Page 41 GAO- 01- 773 College Student Credit Cards

students had primary responsibility for managing their accounts, the company
was committed to assisting those who faced debt problems. Students could
call the customer service number to discuss concerns about their debt, and a
collections specialist would review the account and possibly reduce the
interest rate or establish a minimum payment schedule. Another issuer told
us that it also tried to assist customers experiencing financial difficulty
by reducing interest rates and payments. Two issuers had a partnership with
Consumer Credit Counseling Services, to which both students and nonstudents
had access and which would attempt to work out a no- interest payment
schedule. One issuer said that the company also connected customers with
financial counseling organizations such as Myvesta (formerly Debt Counselors
of America) that could help work out a budget for the student and negotiate
a payment schedule.

All six card issuers told us that they provided financial education
information in various formats, including television commercials, magazine
articles and advertising, brochures, and Web sites. Some of these credit
education efforts were conducted in conjunction with Visa or Mastercard, and
the information was directed at both college students and others with little
credit experience. A credit card industry official explained these
educational efforts by pointing out that the industry?s interests were not
served by having its products misused.

Although we were unable to determine the effectiveness of these credit
education efforts and the extent to which they led to responsible credit
behavior in college students, the information appeared to be widely
accessible. Literature was disseminated in several ways. One issuer
published a series of credit education brochures on topics such as money
management, the cost of credit, and developing a credit history. College
students received this information with their monthly billing statements
every 3 months. Another issuer included a brochure on responsible credit use
in ?welcome packages? that were mailed to college students who received
credit cards. An industry association official also told us that the
association had worked with university officials to disseminate
moneymanagement literature at freshmen orientation.

Other educational efforts relied on computers and presentations. Several of
the issuers sponsored Web sites that had credit education components
directed at college students, and one sponsored a Web site of the credit
education program of the National Consumers League. Another issuer had an
interactive CD- ROM that the company had developed with Visa to help
consumers learn about personal finance, budgeting, money management,

Page 42 GAO- 01- 773 College Student Credit Cards

and decisionmaking. A third issuer maintained a full- time employee who
traveled around the country conducting free financial literacy and
responsibility seminars at universities. A fourth issuer had developed
credit education seminars for educational institutions. Finally, a fifth
issuer and a credit card association provided financial support for the
Jumpstart Coalition, an organization that teaches young adults about
personal finance. 42

Studies we reviewed have shown that most college students have at least one
credit card. In two nationwide studies, most students reported being able to
manage their credit card debt- that is, they said they paid off their
balances in full each month or carried a balance of between $1 and $1,000.
However, one of the studies we reviewed showed that around 20 percent of
students reported carrying a monthly balance of more than $1,000. A third
smaller study of students seeking a particular type of loan reported an
average balance of more than $2,700. Credit card debt combined with the
expenses associated with leaving college and finding a job, including making
payments on student loans, could lead those who leave college to debt
repayment problems in the future.

Credit cards were not a new phenomenon for most college students. More than
one- third of students had credit cards before they entered college, and
another 46 percent acquired them during the first year. Except for charges
for tuition and fees, their spending patterns resembled those of
nonstudents. University officials and credit counseling organizations
worried that as inexperienced users, students would not understand the
dangers of accumulating debt. In addition, one study suggested that students
with four or more credit cards, with relatively high levels of debt and who
charged their tuition and fees, could have trouble managing their credit
card debts.

We did not find a uniform response to the controversial issue of oncampus
credit card marketing among the universities we visited. In response to
complaints about aggressive marketing techniques, a few universities had
adopted policies restricting credit card solicitation on campus. Several
state legislatures had considered legislation limiting oncampus credit card
marketing, and one legislature had passed such a bill.

42 See Lewis Mandell, Our Vulnerable Youth: The Financial Literacy of
American 12th Graders, Washington, D. C., Jumpstart Coalition, 1998.
Conclusions

Page 43 GAO- 01- 773 College Student Credit Cards

But many universities we visited allowed nonacademic entities, such as
student unions and bookstores, to set their own policies. In many cases,
alumni associations received significant income from credit card
solicitation. The universities offered varying levels of educational
information on managing finances and support for college students with
credit card debt problems. Financial factors are one of many possible
reasons that students leave college prior to graduation.

The credit card issuers that responded to our inquiries participated
actively in the student market, but again they did not have a uniform set of
policies or practices. In general, college students were seen as a
profitable market over the long term, with some issuers marketing to high-
end schools. Some card issuers treated college students as a special
category, while others did not. Many issuers adjusted their underwriting
standards for students, enabling college students with little or no
employment income to obtain credit cards. The card issuers that responded to
us were also willing to work with students who had trouble managing their
credit card debt, offering options that ranged from credit counseling to
reduced interest rates and extended payment plans.

Credit cards offer clear advantages to college students because they provide
an interest free loan for students until the payment is due and a convenient
noncash payment option for both routine transactions and emergencies. If
used responsibly, credit cards allow students to build up credit histories
that will facilitate increased access to credit in the future. However, if
college students have not learned financial management skills in their
secondary education or from their parents and misuse their credit cards or
mismanage their credit card debt, the disadvantages can outweigh the
advantages. Many college students are responsible for making important
financial decisions for the first time in their lives and are naï¿½ve about
managing a budget. As is true with any credit card user, using credit cards
to make impetuous purchases can lead to extended repayment periods and high
interest charges. Because of inexperience with credit and finance, some
college students may not be financially literate and may be at greater risk
of substantial debt burdens than more experienced consumers. Consistent
misuse of credit cards by college students- particularly combined with
student loan debt- could lead to substantial debt burdens.

We obtained comments on a draft of this report from representatives of the
credit card issuers and Visa and MasterCard officials; Student Monitor,
TERI/ IHEP, and Nellie Mae officials; Board of Governors of the Federal
Reserve System?s Division of Consumer Affairs, the Federal Reserve Bank
Agency Comments

and Our Evaluation

Page 44 GAO- 01- 773 College Student Credit Cards

of Philadelphia, the Office of the Comptroller of the Currency; and the 12
universities we visited. The credit card issuers and their association
officials raised three points, which we summarize below. First, the credit
card industry officials said that the report conclusions, based on the
opinions of university officials, students, and credit counseling
representatives, were not necessarily an accurate reflection of all
students? experiences on that campus or the broader experience nationwide.
Our research at universities was designed to obtain information about how 12
selected universities were dealing with credit card issues, as we stated in
the draft, and not intended to be a sample projectable to universities as a
whole. The sample included a variety of 4- year universities around the
country based upon various criteria. We stratified universities according to
whether or not they were public or private, geographic region, admissions
policies, size and composition of their student body, cost of attendance,
and the existence of any affinity relationship with a credit card issuer.
University officials spoke to us in their official capacities. Many of the
university officials we spoke with had experience at other universities
prior to assuming their current position. Our fieldwork showed university
officials struggling to find an appropriate balance between a university as
a marketplace of ideas and a marketplace for commerce. We spoke with the
presidents of five state student associations, two of whom were from some of
the largest states in the country with many universities and college
students. We also spoke with representatives of three consumer groups in
three geographically different sections of the United States.

Second, the card issuers and their association representatives questioned
our focus on the Nellie Mae study of credit card usage because it was not
based on a random sample representative of the U. S. student population. Our
draft report noted that the Nellie Mae study was limited to a subset of
students who applied for a certain type of student loan. We expanded
language about the study?s limitations to the Results in Brief section of
this report.

Third, the card issuers and their association representatives objected to
references in the draft to increased bankruptcies among 18 to 25 year olds,
on the grounds that there is no reliable information indicating that the
decision to file for bankruptcy resulted from credit card debt incurred
while these individuals were college students. We agree with the
representatives and the draft did not state that the increased bankruptcies
among 18 to 24 year olds are the result of credit card debt. Our report does
state that none of the potential sources of bankruptcy data that we
contacted were able to provide or direct us to data indicating the number of
college student bankruptcy filings. We understand that many

Page 45 GAO- 01- 773 College Student Credit Cards

bankruptcies are associated with significant life events such as a job loss
or medical issue. However, it is reasonable to assume that in some, if not
many cases, credit card debts are a portion of the debts on which bankruptcy
filings are made. Whether or not credit card debt is a cause of bankruptcy
filings has been the subject of academic research. The card issuers and
their representatives also gave us a variety of technical suggestions, which
we incorporated, as appropriate.

Officials from the 12 universities we visited reviewed the university
section of the report. All agreed with our presentation of the information
they provided and agreed that we accurately reported the views they shared
based on their experiences. We have incorporated their suggestions and
technical comments, as appropriate.

Student Monitor, IHEP, and Nellie Mae officials reviewed portions of this
report that reported on the methodology and results of their studies. They
made technical suggestions concerning our reporting of their results, which
we incorporated.

We also obtained comments from officials of the Division of Consumer and
Community Affairs of the Board of Governors of the Federal Reserve System as
well at the Federal Reserve Bank of Philadelphia, and the Office of the
Comptroller of the Currency. All of these officials gave us technical
comments on selected pages concerning how federal bank regulators view
college student credit card portfolios in the context of a risk- based bank
examination, the advantages and disadvantages of credit cards for college
students as well as current law and legislation. We are not making
recommendations in this report.

As agreed with your offices, unless you publicly release its contents
earlier, we plan no further distribution of this report until 30 days from
its issuance date. At that time we will send copies to congressional
committees and copies will be made available to others upon request.

Page 46 GAO- 01- 773 College Student Credit Cards

Major contributors to this report are listed in appendix VI. If you or your
staff have any questions about this report, please contact me or Katie
Harris, Assistant Director on (202) 512- 8678.

Davi M. D?Agostino Director Financial Markets and Community Investment

Appendix I: Scope and Methodology Page 47 GAO- 01- 773 College Student
Credit Cards

We were asked to respond to several concerns surrounding college students?
use of credit cards. To meet this request, we examined (1) the advantages
and disadvantages credit card use presents to college students and available
bankruptcy data, (2) the results of key studies showing how college students
acquire and use credit cards and how much credit card debt they carry, (3)
universities? policies and practices related to oncampus credit card
marketing, and (4) the business strategies and educational efforts credit
card issuers direct at college students. We could not address some specific
questions posed by the requesters because we were not able to obtain access
to the account data of major credit card issuers or specific information on
the underwriting policies and practices. As noted below, we are continuing
negotiations with a group of credit card issuers in an effort to develop a
mutually agreeable arrangement regarding access to appropriate data.

To describe the advantages and disadvantages of credit card use for college
students, we interviewed officials from universities and credit card
issuers, as well as representatives of student groups. We also collected and
analyzed information from the credit card industry, universities, student
groups, and consumer groups including Myvesta, the Public Interest Research
Group, Auriton Solutions (affiliated with the Association of Independent
Consumer Credit Counseling Agencies and other organizations), and the
National Consumer Law Center. To identify data on college student bankruptcy
filings, we contacted officials at the U. S. Department of Education,
Administrative Office of the U. S. Courts, U. S. Office for Trustees, and an
academic who has conducted empirical research on consumer bankruptcy issues.

To learn how college students acquire and use credit cards and how they
manage credit card debt, we searched for studies on college students?
experiences with credit cards- how students acquired and used cards and paid
their credit card bills. We selected and analyzed three studies to highlight
in this report. Two of them (one by the nonprofit, nonpartisan groups The
Education Resources Institute and Institute for Higher Education Policy and
one by a marketing research firm, Student Monitor) were selected because
their surveys were based on random, statistically valid samples of larger
and broadly defined populations of college students in the United States.
These two studies were limited by the fact that their surveys relied on
self- reporting from the students, and research suggests that respondents
tend to underreport information that could Appendix I: Scope and Methodology

Appendix I: Scope and Methodology Page 48 GAO- 01- 773 College Student
Credit Cards

reflect badly on them- for example, indebtedness. 1 We selected a third
survey done by Nellie Mae- a national provider of higher education loans for
students and parents- because its research was based on credit reports and
not self- reported data. This study was limited by sample selection bias, as
the sample was drawn from only those students who applied for a certain type
of private loan. These students either did not qualify for federal student
loans or had already received the maximum amount available to them. It is
not clear how those who apply for such private loans from Nellie Mae are
similar to or different from other college students in the United States. We
discussed the methodology and results of these three studies with officials
of the sponsoring organizations. We also discussed some or all of these
studies with an academic expert, officials of the American Council on
Education, and the USA Group, a guarantor and administrator of student
loans.

The three studies share limitations common to this kind of research (fig. 14
provides details of the studies? methodologies). Two of the studies relied
on self- reports of personal financial information and may suffer to some
degree from errors in lack of memory, poor estimates, and underreporting of
credit card balances owing to the social stigma of being in credit card
debt. The practical difficulties of conducting such surveys- such as
obtaining a sample that covers the entire population under consideration and
gaining the cooperation of enough of the sample to make it representative-
may also limit the usefulness of these results. Response rates of the two
surveys were not reported. A low response rate may jeopardize the
representativeness of a sample survey. The Nellie Mae study, which relied on
credit bureau reports, avoided the problems that are common to surveys that
rely on reports from individuals. But it is restricted to a special
subpopulation of loan applicants, and the results are probably not
representative of a larger and typical college- student population as a
whole.

1 See David G. Gross and Nicholas S. Souleles, ?An Empirical Analysis of
Personal Bankruptcy and Delinquency? Working Paper 98- 28- B (University of
Pennsylvania, The Wharton School, Financial Institutions Center, 98- 28- B,
Nov. 11, 1999).

Appendix I: Scope and Methodology Page 49 GAO- 01- 773 College Student
Credit Cards

Figure 14: Three Studies on College Students and Credit Cards

Source: GAO analysis of three studies.

We identified other studies on credit cards and college students, but these
reports used methodologies that did not include random sampling techniques
(app. III). We could not draw inferences from these reports about the
student population as a whole or even about a specific subset of students.
For this reason, these studies were not included in the main part of this
report.

To describe universities? responses to credit card marketing, we
judgmentally selected and visited 12 colleges and universities and conducted
about 100 structured interviews. We also collected documentation at
universities including university policies, credit education materials, and
credit card applications. We observed tabling and other marketing directed
at college students on these campuses. We compiled a list of colleges and
universities chosen for their status as public or private institutions,
their geographic region, their admissions policies, the size and composition
of their student body, the cost of attendance, and the existence of an
affinity relationship with a credit card issuer. We attempted to visit a
varied sample of 4- year colleges and universities. Nine

Appendix I: Scope and Methodology Page 50 GAO- 01- 773 College Student
Credit Cards

of the 12 universities we selected were public and 3 were private. 2 Five
had more selective or most selective admissions standards, according to
college entrance test scores, and seven were less selective. Six of the
universities had small- to medium- sized undergraduate student body
populations- 10,000 or fewer students- and 6 were large universities-
greater than 10,000 students. Three of the universities had substantial
minority student populations- Hispanic, Asian, and others- and one of the
colleges was a historically African American school.

We interviewed about 100 university officials from a number of university
administrative offices (the dean of students and heads of student affairs,
bursar, comptroller, and financial aid), as well as officials from student
unions, alumni associations, athletic departments, bookstores, student
governments, and others including some credit union officials. On campuses,
we collected credit card applications from various locations, including
student unions, alumni association offices, credit unions and other private
financial service providers, and bookstores. We obtained and analyzed
university documents relating to policies on credit card solicitation on
campus, financial education at freshman orientation, and other issues. We
did not verify the accuracy of the testimonial and documentary information
university officials provided.

To describe the business strategies and practices of credit card issuers-
marketing, underwriting, and educational efforts- we selected 12 of the 20
largest credit card issuers in the United States. With one exception, all
the issuers marketed credit cards to college students. We included two
credit card companies that issued affinity cards through university alumni
associations and athletic departments and a regional financial services
company that did not market nationally. In October 2000, we sent the issuers
a letter requesting data and an opportunity to discuss issues related to
college students and credit cards. This letter included a draft pledge of
confidentiality that we were prepared to sign, a signed pledge of
confidentiality from our requesters, and a request for aggregate account
data from college students and other consumer group accounts.

2 We included more public universities in our sample, because most college
students attend public schools. Thirty- four percent of 4- year institutions
of higher education in the United States are private nonprofit or
proprietary, and 66 percent are public, according to the National Center for
Education Statistics. Because public institutions tend to be larger than
private institutions, more students attend public universities than these
percentages suggest.

Appendix I: Scope and Methodology Page 51 GAO- 01- 773 College Student
Credit Cards

Card issuer participation in our study was strictly voluntary; we have no
legal right of access to their account data or other business information.
Several card issuers chose not to meet with us, and after 4 months of
attempting to arrange meetings, we had met with only five. The issuers that
did agree to meet with us would generally discuss their marketing and
educational efforts and were not inclined to discuss their underwriting
practices, citing the proprietary nature of the information and issues of

?business competition.? One card issuer declined to meet with us or answer
our questions. Due to confidentiality concerns, all of the issuers declined
to allow us access to data on their college student accounts in a manner
that would allow us to verify authenticity. In January 2001, we asked 10 of
the 12 card issuers to provide written answers to questions about their
business strategies and educational efforts directed at college students;
six responded. 3 (App. V lists the questions we asked the nine issuers.) To
address the educational efforts of the credit card industry, we also met
with Visa and MasterCard officials and reviewed documentation they provided.
We did not verify the accuracy of the testimonial and documentary
information that credit card issuers provided and some information issuers
provided did not respond precisely to our questions.

In declining to provide us direct access to data about college student
credit cards, the issuers cited their concerns about the proprietary and
confidential nature of their data. However, after we addressed these
concerns, in January 2001, eight credit card issuers expressed willingness
to participate in a study of account data that would compare college
students with other groups. Coordinating through the Consumer Bankers
Association, these issuers offered to have a third party of their choosing
do a study based on their data. We accepted the idea of a third- party
contractor assembling a database drawn from the issuers? account data. To
meet our auditing standards, it will be necessary for us to retain and
supervise a contractor independent of the credit card industry. Government
auditing standards require that ?in matters relating to the audit work, the
audit organization and the individual auditors, whether government or
public, should be free from personal and external impairments to
independence, should be organizationally independent, and should maintain an
independent attitude and appearance.? 4 As of May

3 Two of the issuers had either sold their credit card portfolios or were in
the process of selling them during our study, and we dropped them from our
sample. 4 Comptroller General of the United States. Government Auditing
Standards. Washington, D. C., Government Printing Office, June 1994.

Appendix I: Scope and Methodology Page 52 GAO- 01- 773 College Student
Credit Cards

2001, we are continuing to explore the feasibility of using an independent
contractor to create a database with verified data provided by the eight
credit card issuers that we can analyze.

We also met with federal bank regulatory officials from the Board of
Governors of the Federal Reserve System, the Federal Reserve Bank of
Philadelphia, and OCC. We met with OCC and the Federal Reserve Board because
they oversee most of the large credit card issuers. We discussed with the
Federal Reserve and OCC the credit card industry in general and the issue of
credit cards and college students in particular, as well as applicable laws,
disclosure requirements, and examination practices. We also spoke with
officials from the Federal Trade Commission, Associated Credit Bureaus,
American Bankruptcy Institute, VISA, and MasterCard. The Federal Trade
Commission has enforcement responsibility for lenders that are not under the
supervision of another federal agency. We obtained comments on a draft of
this report from representatives of the credit card issuers who participated
in this study and the Consumer Bankers Association, and from officials of
the Board of Governors of the Federal Reserve System and the universities we
visited. We incorporated technical comments as appropriate.

We conducted our review at credit card issuers and universities in various
cities and states around the United States. To maintain the confidentiality
of the issuers and universities, we are not disclosing the names of the
states and cities where we did our field work. We conducted our work between
July 2000 and April 2001 in accordance with generally accepted government
auditing standards.

Appendix II: State Legislation Regarding Credit Card Solicitation at
Institutions of Higher Education, 1999 to 2001

Page 53 GAO- 01- 773 College Student Credit Cards

This appendix presents information about state legislation related to credit
card solicitation on college and university campuses. 1 We obtained basic
information about legislative activity from the National Conference of State
Legislatures, secured additional information about individual bills from
sponsors or other knowledgeable sources in the individual state
legislatures, reviewed current information published by state legislatures,
and reviewed information on state legislation found in Lexis databases.

Proposed legislation and resolutions were introduced in at least 24 states
from 1999 through Mid- May 2001. Legislative provisions range from requests
to study the effects of credit cards on college students to proposals
limiting solicitation on campuses. Three bills, one in Arkansas and two in
Louisiana were enacted. Legislators we spoke with told us that the impetus
for their proposed legislation included complaints from parents of college
students and from student groups, as well as negative media reports about
credit card solicitation on college campuses. Legislatures in five states
proposed studies of credit cards on college and university campuses.

The proposed legislation in several states would regulate credit card
solicitation in a variety of ways including

1. a ban on the use of incentives to entice students to apply for credit
cards;

2. a requirement that a student?s parent or legal guardian give written
consent to the student?s credit card application;

3. a provision to protect parents of college students from the debt
collection actions of credit card issuers;

4. a requirement that credit card issuers register with the college or
university before soliciting on campus;

5. a requirement that credit card issuers, universities, or organizations
provide debt education materials or a program for students;

1 The described legislation is a partial listing of proposed or enacted
state legislation aimed at regulating credit card solicitation at
institutions of higher education and reflects the most current available
information. Bills that were withdrawn or that initially failed and were
reintroduced at a subsequent session are excluded from this presentation.
The most recently amended version of proposed legislation may not be
presented. Appendix II: State Legislation Regarding

Credit Card Solicitation at Institutions of Higher Education, 1999 to 2001

Appendix II: State Legislation Regarding Credit Card Solicitation at
Institutions of Higher Education, 1999 to 2001

Page 54 GAO- 01- 773 College Student Credit Cards

6. a provision that colleges, universities, or education departments set
policies and procedures for controlling credit card solicitation on campus;
and

7. a prohibition against the dissemination of information on students to
credit card issuers or extenders of credit for compensation.

Table 2: Proposed or Enacted State Legislation on Credit Card Solicitation
at Institutions of Higher Education from 1999 to 2001

State Year introduced Status Summary of law, bill or resolution 1. Arkansas

Act 1328 House Bill 1147 A. C. A. 4- 104

January 1999 Enacted 4/ 12/ 99 Enacted: 1. Prohibits face- to- face offers
of gifts or promotional incentives to

persons under age 21 on the campus of an institution of higher education to
entice them to apply for credit cards. 2. Requires that, prior to any
personal solicitation in which gifts or

other promotional incentives are being offered, the credit card issuer
verify the identity and age of the person to be solicited by review of
credible means of identification. 3. Prohibits the issuance of a credit card
whose application was

obtained in violation of Act 1328. 4. Requires a credit seminar be provided
at freshman orientation if

institution of higher learning permits solicitation of credit cards at
athletic events. 5. Provides that violation of section will be a misdemeanor
and

imposes a fine of $500 to $1000. 6. Exempts solicitation by banks and credit
unions located on

campuses if solicitation is done in the office. 7. Applies to public and
private universities, colleges, technical

colleges, and community colleges located in Arkansas. 2. California

Senate Bill 796 February 25,

1999 Passed the Senate 8/ 25/ 00;

Passed the Assembly 8/ 22/ 00; Vetoed by governor 9/ 18/ 00

Proposed: Requests the University of California and the governing boards of
public and private institutions of higher education, and requires the
California State University and Community Colleges to adopt policies, in
accordance with specified requirements, to regulate marketing practices used
on campuses by credit card companies. In adopting the policies, the intent
of the legislature is that the following requirements be considered: a) That
sites at which credit cards are marketed be registered with

campus administration and consideration be given to limiting the number of
sites allowed on a campus. b) That marketers of credit cards be prohibited
from offering gifts to

students for filling out credit card applications unless the student has
first read a credit card education brochure prepared either by the college
or university or by a nonprofit credit card or debt education organization.
c) That credit card and debt education materials be included in

brochures inserted in shopping bags at campus bookstores. d) That credit
card and debt education and counseling sessions

become a regular part of campus programs, including those relating to new
student orientation.

Appendix II: State Legislation Regarding Credit Card Solicitation at
Institutions of Higher Education, 1999 to 2001

Page 55 GAO- 01- 773 College Student Credit Cards

State Year introduced Status Summary of law, bill or resolution

Assembly Bill 521 February 21, 2001 Approved by

Committees on Higher Education Banking and Finance, Rereferred to Committee
on Appropriations, 5/ 3/ 01

Proposed: 1. Defines student credit card as a credit card provided to a

student at a public or private college or university and provided to the
student solely based on enrollment and not based on his or her income. The
definition does not include a credit card issued to a student who has a
cocardholder or cosigner who would otherwise qualify for a credit card other
than a student credit card. 2. Requires that student be issued a credit
limit of $500 and

authorizes raise in credit limit to $1000 if student cardholder demonstrates
a good payment record for 12 months. 3. Requests governing body of private
or independent colleges or

universities and requires the trustees and board of governors of the state
universities and community colleges to adopt policies regulating the
marketing practices used on campuses by credit card companies. These
policies are to address: a) That sites at which credit cards are marketed be
registered on

campus and consideration be given to limiting the number of sites allowed on
campus, and b) The prohibition of gifts to students for completing credit
card

applications, and provision of credit card and debt education and counseling
sessions as a regular part of campus orientation of new students. Senate
Bill Number 43 December 8,

2000 Approved by Committee on

Education, Rereferred to Committee on Appropriations, 4/ 25/ 01

Proposed: Every public or private institution of postsecondary education is
prohibited from disclosing to anyone not employed by the institution any
directory information concerning a current or former student without
disclosure to the student of the purposes for which the information will be
used and the written permission of the student to disclose the information.
Directory information includes name, address and dates of enrollment. 3.
Delaware

Senate Bill Number 95 April 3, 2001 Referred to

Committee on Natural Resources and Environmental Control, 4/ 3/ 01

Proposed: Prohibits credit card institutions and other persons from
soliciting credit cards or similar loan products on the campuses of
educational institutions in Delaware that receive all or part of their
operating budgets from State appropriations. Provides civil penalties for
violation of the prohibition. Senate Bill Number 87 March 22, 2001 Referred
to

Senate Committee on Natural Resources and Environmental Control, 3/ 22/ 01

Proposed: Prohibits credit card institutions and other persons from issuing
a credit card or similar loan product with a credit limit or loan amount
that exceeds $2, 500 to a person under the age of 21 unless the person can
demonstrate sufficient income for the limit or the person?s parent or
guardian cosigns for the account.

4. Hawaii

House Resolution Number 32 H. D. 1

February 17, 2000 Adopted

4/ 24/ 2000 Adopted: 1. Requests the Board of Regents of the University of
Hawaii and

the governing bodies of private colleges and universities to: a) study the
direct solicitation of students on campus for credit card

accounts; and b) offer consumer credit and money- management seminars as
part

of freshmen orientation to ensure that students are wellinformed about the
principles of credit and sound money management.

Appendix II: State Legislation Regarding Credit Card Solicitation at
Institutions of Higher Education, 1999 to 2001

Page 56 GAO- 01- 773 College Student Credit Cards

State Year introduced Status Summary of law, bill or resolution 5. Kansas

House Bill Number 2153

January 24, 2001 To House Committee on Appropriations, 1/ 25/ 01

Proposed: 1. No credit card issuer, while on any campus of an institution of

postsecondary education, shall solicit any individual to apply for a credit
card. 2. Shall not apply to solicitation of a credit card application by an

officer, agent or employee of a financial institution that has its place of
business located on campus and the solicitation occurs during normal
business hours. 3. No officer, agent or employee of the institution of
postsecondary

education shall knowingly allow any credit card issuer to make any
solicitation that violates the section, or knowingly sell or give to any
credit card issuer any list of names or addresses of persons who are
students at or employed by the institution. 4. Fines of between $500 and
$5,000 shall apply to violations.

6. Kentucky

House Bill 384 January 18, 2000 Regular Session

Adjourned 4/ 14/ 00; no carryover

Proposed: 1. Requires credit card issuer to register with university before

soliciting students on campus. 2. The interest rate and annual fee must be
prominently displayed

at the site on campus where the credit card issuer solicits students. 3. If
the institution permits the solicitation of students on campus

for credit cards, the institution is to include a credit seminar with
freshman orientation. 4. Prohibits the offer of gifts or any other
promotional incentives on

campus to students to entice students to apply for credit cards. 5.
Prohibits any debt collection by a credit card issuer against

parent or legal guardian of the student unless the parent or guardian has
agreed in writing to be liable for credit card debts of the student. 6.
Directs that the credit card issuer is guilty of a misdemeanor and

is to be fined from $500 to $1, 000 for each violation. Senate Resolution
Number 43 January 19, 2000 Adopted 3/ 8/ 00 Adopted:

The governing board of each institution of higher education in the
Commonwealth is urged to provide a credit seminar in each institution?s
freshman orientation and to provide its students with counseling on how to
use credit wisely.

7. Louisiana

House Bill 1353 Act 1110 L. R. S. 9.3578.1 through 3578.5, Campus Credit
Card Solicitation Act

March 26, 1999 Enacted 7/ 15/ 99 Enacted: 1. Requires credit card issuers to
register with the educational

institution prior to engaging in solicitation of college students on a
college campus. 2. Prohibits a credit card issuer from taking any debt
collection

action against the parent or legal guardian of the student, unless the
parent or guardian has agreed in writing to be liable for the debts. 3.
Provides for fines of up to $1,000 for each violation. House Bill 195 Act
934, L. R. S. 17: 3351.2, Dissemination of Certain Information by Public
Postsecondary Institutions

February 1, 1999

Enacted 7/ 15/ 99

Enacted: 1. Prohibits a public post secondary educational institution from

permitting the dissemination of solicitations, advertisements, application
or information concerning consumer credit cards on campuses to undergraduate
students during registration for classes. 2. Prohibits an institution from
permitting any of its employees to

Appendix II: State Legislation Regarding Credit Card Solicitation at
Institutions of Higher Education, 1999 to 2001

Page 57 GAO- 01- 773 College Student Credit Cards

State Year introduced Status Summary of law, bill or resolution

disseminate solicitations, advertisements, application or information
concerning consumer credit cards to undergraduate students at any time. 3.
Prohibits the institution from providing information on any

student to the extender of credit for compensation. House Study Request No.
45 May 21, 1999 Approved

5/ 27/ 99 a Approved:

1. Study by House Committee on Commerce to address: a) the practicality of
requiring credit card companies soliciting on

college campuses to register with the college before soliciting; b) the
practicality of requiring college students to receive parental

consent to obtain a credit card; and c) prohibiting debt collection against
parents or guardians of

college students. 2. Study to report findings to the House of
Representatives before

the convening of the 2000 session. No such report was issued. House
Resolution 23 April 12, 1999 Adopted

4/ 26/ 99 Adopted:

1. Urges and requests Board of Regents to encourage institutions of higher
education to provide information on consumer credit and the dangers of
credit card debt to college students and their parents, and to disseminate
such information on campus in any other manner deemed appropriate. 2.
Information provided shall include consumer awareness

information regarding good credit, sound money management, and the potential
impact of credit card debt on personal finances and future employment,
information about obtaining student loans to complete undergraduate,
graduate, and professional school, as well as reputable resources, which
offer consumer credit information or counseling without charge or for a
modest fee.

8. Maryland

House Bill 875 February 9, 2001 To Committee

on Commerce and Government Matters, 2/ 9/ 01

Proposed: 1. Requires the Maryland Higher Education Commission (MHEC)

to establish and update written guidelines concerning the solicitation of
students by a credit card issuer on the campus of an institution of higher
education. 2. Requires a higher education institution that permits the

solicitation of students by credit card issuers on its campus to comply with
the MHEC?s guidelines. 3. Requires that established guidelines of the MHEC
on solicitation

of credit cards at higher education institutions not be construed as
permitting solicitation of credit cards. House Bill 959 February 9, 2001
Unfavorable

Report by Committee on Commerce and Government Matters, 3/ 12/ 01

Proposed: 1. Requires credit card issuers that conduct marketing activities
on

a campus of an institution of higher education to provide a program of
education on the responsible use of credit to students on that campus and
their families. 2. Prohibits the issuance of a credit card to a student
enrolled in

the institution of higher education unless the application submitted by the
student includes certain proof that the applicant has attended the education
program. 3. Prohibits credit card issuers from offering gifts in exchange
for

the completion of a credit card application under certain circumstances.

Appendix II: State Legislation Regarding Credit Card Solicitation at
Institutions of Higher Education, 1999 to 2001

Page 58 GAO- 01- 773 College Student Credit Cards

State Year introduced Status Summary of law, bill or resolution

4. Prohibits credit card issuers from purchasing from an institution of
higher education certain information about students at the institution of
higher education.

House Bill 45 Senate Bill 470

July 2000 prefiled for 2001

H. R. 45: Unfavorable Report by Commerce and Government Matters, 2/ 12/ 01;
S. B. 470 was withdrawn from further consideration, 2/ 27/ 01

Proposed: 1. Limits the total amount of credit that may be extended by
credit

card issuers to students under the age of 23 years at institutions of higher
education. 2. Prohibits a credit card issuer from increasing the amount of

credit that may be extended to the students under specified circumstances.
3. Prohibits a credit card issuer from opening a credit card account

for or issuing a credit card to the students under specified circumstances.

House Bill 764 February 10, 2000 General

Assembly adjourned 4/ 10/ 00, no carryover

Proposed: 1. Prohibits credit card issuers from purchasing or obtaining from

an institution of higher education the names and addresses of students at
the institution. 2. Prohibits credit card issuers from offering gifts or
other

promotional incentives to a student at a higher education institution in
connection with an application for a credit card. 3. Requires credit card
issuers that solicit credit card applicants on

campuses of higher education institutions to provide opportunities for
students at the institution of higher education to become educated about the
proper use of credit cards, methods to avoid excessive indebtedness, and how
to manage debt responsibly. 4. Prohibits a credit card issuer from taking
legal action against the

parent or legal guardian of a student at a higher education institution for
the student?s credit card debt unless the parent or legal guardian agrees in
writing to be liable.

9. Massachusetts

House Bill Number 3665

January 3, 2001 Held in Joint Committee on Banking and Commerce, 5/ 17/ 01

Proposed: Rules and regulations prescribed by the Commissioner of Banks
shall provide that no solicitation shall be made to a consumer under the age
of 21 years on any college campus.

House Bill Number 3664 January 3, 2001 Held in Joint

Committee on Banks and Banking, 5/ 17/ 01

Proposed: No application for credit shall be provided or distributed in any
manner to any person under the age of 25 if such rate, finance charge or
credit limit is greater that the rate, finance charge or credit limit being
offered at that time to persons 25 years of age and older. House Bill 2866
January 3, 2001 In Joint

Committee on Education, Arts and Humanities, 3/ 13/ 01

Proposed: The Massachusetts Board of Higher Education shall create rules and
regulations governing credit card company access to all Massachusetts public
higher education institutions and suggest rules and regulations to all
Massachusetts private higher education institutions.

10. Missouri

House Bill 683 February 7, 2001 From House

Committee on Education, 3/ 7/ 01

Proposed: 1. Every public institution of higher learning in Missouri that

collects personal information from students, including but not limited to
names, campus or home addresses, telephone numbers or other identifying
information in student or campus

Appendix II: State Legislation Regarding Credit Card Solicitation at
Institutions of Higher Education, 1999 to 2001

Page 59 GAO- 01- 773 College Student Credit Cards

State Year introduced Status Summary of law, bill or resolution

directories, shall include in any forms, telephone services or computer
services used in the student?s registration for each fall semester a
provision in which the student shall indicate whether the student wishes to
receive solicitations, offers or other advertisements based on such
directory listing. Such forms, telephone services or computer services shall
also include a provision in which the student shall choose whether to have
his or her name listed in the directory, and the institution shall not list
any student who chooses not to be listed. 2. If the student chooses not to
be included in the directory and not

to receive solicitations, the institution shall not knowingly sell or
distribute the name of such student to any entity that uses such information
either to engage in advertising, trade or commerce or for offers of credit.
3. The coordinating board of higher education shall adopt policies

to provide for dissemination of information to all public institutions of
higher education in Missouri regarding the responsible use of credit by the
students at such organization. Such policies shall, at a minimum, provide
the following: a) If an institution conducts a new student orientation
program for

students, parents or both, the institution shall include in such session
information on the responsible handling of credit and shall strongly
encourage full attendance by incoming students; b) All institutions shall
provide an educational seminar on the

responsible handling of credit and the consequences of its abuse, which
shall occur not less than once each semester; and c) All institutions shall
include within their student conduct guide or

comparable standards manual a chapter or section on the responsible use of
credit. 4. Every public institution of higher education in Missouri shall

adopt and enforce a policy governing the solicitation and marketing of
commercial and noncommercial products and services, including but not
limited to credit- related products to its students, faculty, alumni,
provided that such policy shall: (1) be nondiscriminatory; (2) protect the
best interests and welfare of its students. 5. Every public institution of
higher education in Missouri that

receives either money for the distribution of credit cards to its students
or any percentage of money from the use of credit cards bearing the college
or university name or logo, shall report the amount of such moneys or any
such percentage that it received, as well as how such monies were expending
during the previous fiscal year, to the coordinating board of higher
education; and use at least 50 percent of the moneys received pursuant to
this subsection toward individualized credit counseling programs at such
school.

11. New Hampshire

House Bill 1364 December 1999 Failed to pass

House 2/ 17/ 00 Proposed: Establishes a study committee on the impact of
student credit card

debt and to determine if oversight and regulation of credit card
solicitation on college campuses is recommended.

12. New Jersey March 29, 2001 Referred to Proposed:

Appendix II: State Legislation Regarding Credit Card Solicitation at
Institutions of Higher Education, 1999 to 2001

Page 60 GAO- 01- 773 College Student Credit Cards

State Year introduced Status Summary of law, bill or resolution

Senate Bill Number 2283

Senate Commerce Committee 3/ 29/ 01

Requires a public institution of higher education to establish a financial
management program for its students if the institution enters into an
agreement for the direct solicitation of credit cards to its students. The
financial management program is to be funded by the credit card issuers and
is to conform to the guidelines for the program established by the
Department of Banking and Insurance. If a student has not successfully
completed the financial management program prior to entering a credit card
agreement pursuant to a direct solicitation, the student would not be liable
for any interest on the debt. Assembly Bill 1136 January 11, 2000 From
Assembly

Committee on Education, 2/ 28/ 00

Proposed: Prohibits public institutions of higher education from entering
into any agreement, or permitting any of its agents or student organizations
from entering into any agreement for the direct merchandising of credit
cards to any students.

13. New Mexico

Senate Memorial 7 b January 1999 Approved

2/ 25/ 99 Approved:

Requests state educational institutions to eliminate or curtail on campus
solicitation of credit cards.

14. New York

Senate Bill 1232 Assembly Bill 6706

S. B. 1232, January 18, 2001; AB. 6706, March 6, 2001

In Senate Committee on Higher Education, 1/ 18/ 01; Assembly Committee on
Higher Education, 3/ 6/ 01

Proposed: Prohibits the State University of New York (SUNY) and the City
University of New York (CUNY) from entering into any agreement for the
direct merchandising of credit cards to any enrolled student.

Assembly Bill 1793 Senate Bill 36

January 2001 Referred to Assembly Judiciary Committee, 1/ 16/ 01;
Recommitted to Senate Judiciary Committee, 3/ 12/ 01

Proposed: Requires parental approval before a credit card may be issued to
an unemancipated child (defined as a person less than 22, who remains a
dependent or in the custody of a parent or legal guardian) without the
express written consent of the child?s parent or legal guardian.

15. North Carolina

Senate Bill 800 April 3, 2001 Referred to

Committee on Rules and Operation of the Senate, 4/ 3/ 01

Proposed: Authorizes a research commission to study the issue of credit card
solicitation, including the study of whether the University of North
Carolina and private colleges and universities should adopt policies that
restrict direct credit card solicitation of students who reside on campus.

House Bill 1107 April 1999 General Assembly adjourned 7/ 13/ 2000, no
carryover

Proposed: 1. Requires credit card issuers to obtain the written consent of

parents or legal guardians of any student that they solicit for a credit
card who submits a credit card application. 2. Provides that parents or
guardians who give their consent will

not be liable under the credit card agreement unless they specifically agree
to be liable.

Appendix II: State Legislation Regarding Credit Card Solicitation at
Institutions of Higher Education, 1999 to 2001

Page 61 GAO- 01- 773 College Student Credit Cards

State Year introduced Status Summary of law, bill or resolution

3. Makes it an unlawful trade practice for the credit card company to take
any debt collection action against a parent or guarding who did not agree to
be liable under the credit card agreement. 4. Provides for civil and
criminal penalties.

16. North Dakota

Senate Concurrent Resolution 4040

February 15, 2001 Failed to pass

House 3/ 20/ 01

Proposed: Resolves that the Legislative Council study the problems
associated with credit card companies marketing credit cards to college
students and report legislation to implement the findings and
recommendations to the legislature. Senate Concurrent Resolution 4041
February19, 2001 Failed to pass

House 3/ 20/ 01 Proposed: Resolves that the Legislative Council study the
financial impact of

credit card fees imposed on public institutions of higher education and the
social effect of credit card debt on young adults and report its findings
and recommendations to the legislature.

17. Oklahoma

Senate Concurrent Resolution 1

December 2000 To Senate Committee on Appropriations, 2/ 6/ 01

Proposed: The Oklahoma State Regents for Higher Education and any
organizations associated with state- supported higher education institutions
are requested to terminate any existing contracts with credit card issuers,
and to cease entering into any contracts in the future, to cease any
practices that allow credit card issuers to use space or facilities of a
state- supported higher education institution for the purpose of taking
applications for credit cards, issuing credit cards, providing inducements
or otherwise merchandising credit cards, to persons under 21 years of age,
who are not financially independent, without the express written approval of
such person?s parent or legal guardian. Senate Concurrent Resolution 3 March
22, 1999; Adopted, May

28, 1999 Resolved: The Oklahoma State Legislature requests that Oklahoma
public

institutions of higher education include a consumer credit education program
as part of new student orientation.

18. Pennsylvania

Senate Bill 137 January 29, 2001 Passed Senate, sent to House,

5/ 8/ 01; Motion to reconsider in Senate granted, 5/ 8/ 01

Proposed: 1. The state board of education shall require public and private

institutions of higher learning to adopt a policy to regulate the marketing
practices used on campuses by credit card companies. In adopting a policy,
the educational entities shall consider the following requirements: a)
registering on campus credit card marketers; b) limiting credit card
marketers to specific college campus sites

designated by the administration; c) prohibiting credit card marketers from
offering gifts to students in

exchange for completing a credit card application unless the student has
read a credit card debt education brochure; d) providing a credit card debt
education brochure with campus

bookstore purchases; and e) developing a credit card debt education
presentation to be

incorporated into orientation programs offered to new students. House Bill
27 January 8, 1999 Referred to

House Committee on Education, No

Proposed: 1. Requires a credit card issuer to register with an appropriate

official of the institution of higher education its intent to solicit the
student before engaging in the solicitation of a student on a

Appendix II: State Legislation Regarding Credit Card Solicitation at
Institutions of Higher Education, 1999 to 2001

Page 62 GAO- 01- 773 College Student Credit Cards

State Year introduced Status Summary of law, bill or resolution

action by committee 1/ 20/ 99

college campus. ?Student? means a person under age 21 at an institution of
higher education on a full- time or part- time basis. 2. Requires the
registration to include the principal place of

business of the credit card issuer and be in a form as required by the
Department of Education. 3. Renders the application for a credit card
executed by a student

who was solicited for the credit card on a college campus to be void and
unenforceable unless the parent or legal guardian of the student consents in
writing to the student?s submission of the application to the credit card
issuer. 4. Establishes that parental consent given is not to be construed

as consent to be liable under the credit card agreement unless the parent or
legal guardian specifically agrees in writing to do so. 5. Prohibits the
credit card issuer from taking any debt collection

action against the parent or legal guardian of a student for whom a credit
card has been issued unless the parent or legal guardian has agreed in
writing to be liable for the debts of the student under the credit card
agreement.

19. Rhode Island

House Bill 5780 February 6, 2001 Passed House,

referred to Senate Committee on Corporations 5/ 9/ 01

Proposed: 1. Prior to engaging in any credit card marketing activity on any

campus, a credit card issuer shall register with the educational
institution. 2. Makes it unlawful to offer gifts on campus in connection
with the

solicitation of credit cards. 3. If an institution permits credit card
solicitation, it must require all

new students to attend a comprehensive seminar on the responsible use of
credit. The seminar should include the following: a) A full explanation of
the financial consequences of not paying off

credit card balances in full within the time specified to avoid interest
charges, including an explanation of how the credit card issuer computes
interest on unpaid balances; b) A full explanation of the impact of a shift
from an introductory or

initial interest rate to an ongoing interest rate that is higher, including
the exact time when the higher ongoing interest rate takes effect, and the
description of the acts on the part of the cardholder that will cause an
immediate shift to the higher interest rate. c) A full explanation, with
examples, of how long it would take to

pay off various illustrative balance amounts by paying the minimum monthly
payment required under the credit card agreement; d) A full explanation of
credit related terms, including fixed rates,

variable rates, introductory rates, balance transfers, grace periods, annual
fees, and any other fees charged by the credit card issuer. e) A full
discussion of the generally accepted prudent uses of

credit, and the consequences of imprudent uses, as presented by recognized
credit counseling agencies. 4. All qualifying students shall be issued a
certificate of successful

completion of the credit seminar. 5. A person violating the provision is
guilty of a misdemeanor. Any

Appendix II: State Legislation Regarding Credit Card Solicitation at
Institutions of Higher Education, 1999 to 2001

Page 63 GAO- 01- 773 College Student Credit Cards

State Year introduced Status Summary of law, bill or resolution

person or firm shall be prohibited from maintaining any civil action for the
recovery of debt created through the use of any credit card obtained in
violation of the provisions.

20. South Carolina

Senate Bill 922 January 11, 2000 Sent to

Committee on Banking and Insurance, 1/ 11/ 00

Proposed: Prohibits the distribution of applications and advertising and any
other form of solicitation for ownership of a seller credit card by a credit
card issuer on the campus of a public institution of higher learning. House
Bill 3595 February 15,

2001 Passed House, to Senate

Committee on Banking and Insurance 5/ 17/ 01

Proposed: 1. A public institution of higher learning in South Carolina must

develop, maintain, and enforce a creditor- marketing policy regulating the
distribution of applications, promotion, marketing, and other forms of
solicitation for ownership of a credit card by a credit card marketer on its
campus. This creditor- marketing policy must be filed with the South
Carolina Commission on Higher Education. The Commission on Higher Education
must maintain a master file of all policies and make the information
available for public inspection. 2. In preparing and adopting the policy,
the board of trustees or its

designee must consider: a) registering on- campus marketers; b) providing a
credit card debt education brochure with each

campus bookstore purchase; c) developing a credit card debt education
presentation as a part of

orientation programs offered to new students; and d) prohibiting credit card
marketers from offering gifts to students in

exchange for completing a credit card application unless the student has
been given a credit card debt education brochure. 3. A public institution of
higher learning in South Carolina that has

not adopted this policy may not allow a credit card marketer to distribute
applications or promotional or marketing materials, or otherwise solicit for
ownership of a credit card on its campus. A credit card marketer is
prohibited from distributing applications or promotional materials, or
otherwise soliciting for ownership of a credit card on the campus of a
public institution of higher learning in South Carolina that has not adopted
a policy. 4. The section does not apply to solicitation by a financial

institution physically located on a campus where normal banking activities
are conducted if the solicitation takes place within its offices,
solicitations by E- mail, or telephone, or contracts between institutions
and creditors in existence on the date of the act. 5. The section does not
apply if the solicitation occurs in the

campus offices of the card marketer.

21. Tennessee

House Bill 993 Senate Bill 1554

February 2001 H. B. 993 to House Committee on Education 2/ 12/ 01; S. B.
1554 to Senate Committee on Commerce, Labor and

Proposed: 1. Requires the institutions of state board of regents and the

University of Tennessee that collect identifying information from students
for publication in student or campus directories, to supply a form allowing
students to indicate they do not want to receive solicitations based upon
the directory listing. 2. Prohibits any credit card issuer from recruiting
potential student

cardholders on campus or at college or university facilities, or through
student organizations.

Appendix II: State Legislation Regarding Credit Card Solicitation at
Institutions of Higher Education, 1999 to 2001

Page 64 GAO- 01- 773 College Student Credit Cards

State Year introduced Status Summary of law, bill or resolution

Agriculture, 4/ 24/ 01, Indefinitely postponed

3. Requires the institutions to report annually any funds they receive or
any percentage they receive from the distribution of credit cards to
students or any percentage from the use of credit cards bearing the school
logo as well as how such funds were expended during the previous fiscal year
to the Joint Oversight Committee on education. 4. Prohibits credit card
issuers offering gifts to students as an

incentive for applying for a credit card. 5. Prohibits the institutions from
using state or federal revenue to

offset or replace any funding from credit card issuers that is lost due to
the provisions of this bill. 6. Requires the institutions to use revenues
received from the

credit card issuer to fund any increase in state expenditures resulting from
the implementation of this bill. House Bill 538 Senate Bill 436

February 11, 1999 General

Assembly adjourned 6/ 28/ 00, No carryover

Proposed: 1. Prohibits institutions of higher education from selling or

distributing student lists to credit card issuers. 2. Prohibits credit card
issuers from recruiting potential student

cardholders or customers on campus, through student organizations or through
alumni groups. 3. Prohibits offers of gifts or any promotional incentives to
students

to entice such students to apply for credit cards or any other instruments
of credit. House Bill 2958; Senate Bill 2592

February 2000 January 2000

General Assembly adjourned 6/ 28/ 00, no carryover.

Proposed: Requires any institution of University of Tennessee or state board
of regents system that receives funds from credit card distributions to
students or the use of school logos to report amount of funds received and
how such funds were used to joint oversight committee on education. House
Resolution 15 February 8, 2001 To House

Committee on Education, 2/ 11/ 01

Proposed: Creates a Special House Committee to study bankruptcy in
Tennessee, including bankruptcy rates, particularly among young adults,
bankruptcy laws, credit marketing regulation.

22. Virginia

House Bill 1451 January 2000 No action by

committee To be continued to 2001

Proposed: Every educational institution shall have the power to: 1.
Establish policies regulating the direct solicitation, marketing,

and distribution of credit cards to students on the institution?s campus
property and grounds. 2. Requires that the policies shall not restrict the
right of credit card

vendors, financial institutions, or other commercial consumer credit
companies to contact students by mail, telephone or electronic means. House
Joint Resolution Number 735, Amendment in the Nature of a Substitute

Proposed by the Senate Committee on Rules on February 19, 1999

Adopted, February 25, 1999

Resolved: The State Corporation Commission, the Department of Agriculture
and Consumer Services, the State Council of Higher Education, and the
Virginia Cooperative Extension Service are requested to develop a plan for
providing consumer credit information to college students, and for
monitoring complaints regarding unsolicited offers of credit, and credit
cards and incentives. The plan shall address providing information to
college students and their parents, and to institutions of higher education,
upon request, regarding: (1) the rights of consumers, including the right to
make inquiries of institutions and

Appendix II: State Legislation Regarding Credit Card Solicitation at
Institutions of Higher Education, 1999 to 2001

Page 65 GAO- 01- 773 College Student Credit Cards

State Year introduced Status Summary of law, bill or resolution

credit card companies; (2) the maintenance of good credit; (3) how to obtain
and interpret credit history information; (4) how to file a consumer
complaint. The plan shall also establish procedures and determine the cost
of collecting and providing data regarding consumer complaints by college
students about credit offers and credit card companies. In addition, the
plan shall address ways to disseminate the consumer information on campus in
the least intrusive and most cost- effective manner. Senate Joint Resolution
Number 421 January 21, 1999 Adopted

February 17, 1999

Resolved: That institutions of higher education be requested to provide
consumer credit information to college students and their parents. Along
with other notices, bills, and information provided students and their
parents during freshman orientation, institutions of higher education are
requested to include consumer awareness information regarding good credit,
sound money management, the potential impact of credit card debt on personal
finances, future employment, obtaining student loans to complete
undergraduate, graduate, and professional school, as well as reputable
resources which offer consumer credit information or counseling without
charge or for a modest fee. Institutions are also requested and encouraged
to disseminate this information on campus in a manner deemed appropriate by
the institution.

23. Washington

Senate Bill 5476 (Substitute)

February 16, 2001 No action by

committee March 2001

Proposed: 1. Requires that credit cards not be issued to persons under 21

without obtaining a written application that includes a statement by the
applicant listing all existing available credit; that available credit must
be listed by source and amount; and the applicant qualifies for credit under
reasonable and prudent industry standard. 2. Failure of credit card
companies to comply with the

requirements constitutes an affirmative defense to the collection of debt
incurred by using the card or credit issued. 3. Prohibits credit card
issuers from offering gifts for the completion

of credit card applications, except for educational material on the
responsible use of credit. 4. Prohibits colleges and universities from
selling or transferring

lists of student names and addresses to credit card issuers. Senate Bill
6258 January 11, 2000 To Senate

Committee on Commerce, Trade, Housing and Financial Institutions, 1/ 12/ 00

Proposed: 1. Requires credit card issuers that conduct a credit card

marketing activity on campus of any institution of higher education in
Washington to provide to students and their families on that campus a
program of education on responsible use of credit. 2. Prohibits the issuance
of a credit card to students enrolled in a

college or university located in Washington unless the application submitted
by a student includes a certificate or other reasonable proof that the
applicant has attended the education program. 3. Prohibits credit card
issuers from offering gifts in exchange for

the completion of a credit card application as part of a marketing program
conducted on any campus of a college or university located in Washington.

Appendix II: State Legislation Regarding Credit Card Solicitation at
Institutions of Higher Education, 1999 to 2001

Page 66 GAO- 01- 773 College Student Credit Cards

State Year introduced Status Summary of law, bill or resolution

4. Provides civil penalties for violation of these provisions.

24. West Virginia

Senate Bill 588 (substituted)

March 26, 2001 Passed Senate 4/ 5/ 01, to House Committee on Judiciary 4/ 6/
01

Proposed: 1. Every person who solicits applications for the issuance of
credit

cards on the property of any institution of higher education must first
register with the institution before soliciting students on campus. Every
registration shall include an agreement that the credit card issuer will not
provide an application to a student unless the student has signed a credit
card education information sheet designed by the governing board of the
institution. 2. No person who solicits applications for credit cards may
offer

any gifts or any other promotional incentives to students while on the
property of an institution of higher education. 3. Every institution that
permits the solicitation of credit card

applications to its students shall include within its freshman orientation
program a seminar regarding credit and related topics. 4. Unless a student?s
parent or guardian has agreed in writing to

be liable for credit card debts of the student, no person may initiate a
debt collection action against the parent or guardian regarding any credit
card debt incurred by the student if the student applied for the credit card
while enrolled at an institution of higher education and the application was
solicited by the company on the property of the institution. 5. No person
may purchase or otherwise obtain from an institution

of higher education specified information about the students that the
institution of higher education, including student lists, for the purpose of
soliciting applications for credit cards. 6. No institution of higher
education may enter into any agreement

for the direct merchandising of credit cards to its students. 7. A person
who violates any of the provisions is guilty of a

misdemeanor and shall be fined an amount not to exceed $500. Senate Bill 538
February 15,

1999 Referred to committee

2/ 15/ 99; Legislature Adjourned 3/ 20/ 99, No carryover.

Proposed: 1. No action by a creditor for a debt owed on a credit card

transaction by a person who is a full- time student at any college or
university located in this state, may be brought while that person is a
full- time student. The action may not be brought until 6 months have
elapsed from the time the person graduated or ceased to be a full- time
student. 2. Judgments against full- time students for debts owed on a credit

card transaction may not be enforced while that person is a fulltime
student. A full- time student may not be threatened with, or denied the
right to graduate because of credit card indebtedness or a judgment based on
credit card indebtedness.

a A study request is approved when no more than one- third of the members of
the Louisiana House of Representatives filed a written objection to the
study request. b A memorial in New Mexico represents a request that a
voluntary action be taken and does not require passage in both state houses
to be effective.

Source: GAO analysis.

Appendix III: Additional Studies of College Students and Credit Cards

Page 67 GAO- 01- 773 College Student Credit Cards

To better understand how students acquire and use credit cards, we conducted
a literature search. In addition to the studies we used in our report, we
found three studies that reported survey results on how students acquire
credit cards, how they use them, and how much debt they incur. 1 We did not
include the results in our report because the survey methodology of these
studies did not employ random sampling techniques that would allow us to
draw inferences about the student population as a whole or even about a
specific subset of students. For example, the sample size may have been too
small, or the observations may have come from populations that were not
random, such as students at a particular college or members of a particular
organization. We briefly describe these studies below.

In 1998, the U. S. Public Interest Research Group 2 (PIRG) published a
survey of 1,260 undergraduate students. 3 PIRG student volunteers on campus
asked students with credit cards to fill out surveys in student centers. In
addition, over the summer a survey was randomly distributed to students
working in PIRG offices around the country. Among the findings PIRG reported
were:

 Students responsible for their own credit cards who obtained cards at
campus tables had more cards (2.6) and higher unpaid balances ($ 1,039) than
those who did not (2. 1 and $854).

 Among students responsible for their own credit cards, more of those who
obtained cards at campus tables reported carrying unpaid balances (42
percent) than those who did not (35 percent).

 Most students surveyed (69 percent) obtained credit cards in their names,
and the others (31 percent) said their parents paid their primary bills or

1 Two other studies that survey credit card usage did not meet the needs of
this report. The Federal Reserve System, with the cooperation of the U. S.
Department of the Treasury, sponsors an extensive survey of family finances
every 3 years. The latest survey, completed in 1998, provided comprehensive
statistics on 4,309 families, including credit card usage and debt, but it
did not distinguish college students from other credit card users. See
Arthur Kennickell, et. al., ?Recent Changes in U. S. Family Finances:
Results from the 1998 Survey of Consumer Finances,? Federal Reserve
Bulletin, Vol. 86, Jan. 2000. Also, the American Bankers Association Bank
Card Industry Survey Report: Eighth Edition

(Washington, D. C., 1999) compiles statistics from card issuers but does not
address issues of student credit card use.

2 The U. S. PIRG is the national lobbying office for the state Public
Interest Research Groups. PIRGs are statewide, nonpartisan, nonprofit
consumer and environmental watchdogs with members in communities and on
college campuses around the country.

3 ?The Campus Credit Card Trap,? Sept. 1998. See www. pirg. org/ student/
consumer/ credit98. Appendix III: Additional Studies of College

Students and Credit Cards

Appendix III: Additional Studies of College Students and Credit Cards

Page 68 GAO- 01- 773 College Student Credit Cards

were cosigners on at least one of their cards. Of those students who
obtained cards in their names, only 15 percent reported holding a full- time
job when they applied.

In 1999, Robert D. Manning of Georgetown University reported the results of
a study of students from four universities in the Washington, D. C. area. 4
The report covered more than 350 interviews and 400 surveys; some of the
surveys were from students walking past one campus building, and others were
given to students taking an Introduction to Sociology class. The study,
which reported results by school, found that 91 to 96 percent of the
students had credit cards and that 53 percent had revolving credit card
debt.

In the spring of 1998, the Boynton Health Service of the University of
Minnesota, Twin Cities Campus, conducted a mail survey of 1,000
undergraduate and graduate University of Minnesota students on a variety of
subjects, including credit cards. About 57 percent of the recipients
responded to the survey. Most respondents had at least one credit card.
Nearly 25 percent of respondents had credit card debt in excess of $1,000.
The researchers found that students who used alcohol and tobacco and who
worked more than 40 hours a week had more credit card debt than those who
did not.

4 ?Credit Cards on Campus: Social Consequences of Student Debt,? and ?Credit
Cards on Campus: Current Trends and Informational Deficiencies.? See www.
creditcardnation. com.

Appendix IV: Card Issuer Code of Conduct Page 69 GAO- 01- 773 College
Student Credit Cards

Appendix IV: Card Issuer Code of Conduct

Appendix IV: Card Issuer Code of Conduct Page 70 GAO- 01- 773 College
Student Credit Cards

Source: MasterCard International.

Appendix V: GAO Letter to Card Issuers Page 71 GAO- 01- 773 College Student
Credit Cards

Appendix V: GAO Letter to Card Issuers

Appendix V: GAO Letter to Card Issuers Page 72 GAO- 01- 773 College Student
Credit Cards

Appendix VI: GAO Contacts and Staff Acknowledgements

Page 73 GAO- 01- 773 College Student Credit Cards

Davi M. D?Agostino, (202) 512- 8678 M. Katie Harris, (202) 512- 8415

In addition to those named above, Patrick Dynes, Janet Fong, Elizabeth
Olivarez, and Robert Pollard made key contributions to this report. Appendix
VI: GAO Contacts and Staff

Acknowledgements GAO Contacts Acknowledgements

(233654)

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