Congress is on the verge of cutting $5 billion from the Pell grant
financial aid program. This would make college more expensive for close
to nine million students next year.
We can't afford this cut, especially when states are cutting college
budgets, causing tuition and fees to skyrocket.
After nearly two years of anticipation, the federal textbook price
disclosure law we passed
in 2008 officially goes into effect today. This law is a
tremendous step forward in our fight for textbook affordability, because
it empowers both students and professors to save money on textbooks.
Here's a quick summary of what this law means:
First, publishers are now required to give
professors detailed information about textbook prices and revision
histories, including the dates of the last 3 editions and a list of
alternate formats. Publishers
often withheld this information, hoping professors would choose
more expensive books. Getting these details on the table will make it
easier to identify and select lower-cost options.
Second, publishers are required to sell the
components of bundled textbooks separately, so students have the option
to buy their books without unnecessary CDs, workbooks and online
pass-codes.
Third, colleges need to list the required textbooks
for each course in the catalog students use to register. That way,
students know what they're getting into, and they have more time to shop
around.
The law will save money for some students right away - the new
information will help some professors choose
less expensive books, and savvy students will have more time to track down the best
deals. Over time, the law will have even greater benefits on
textbook costs. Increased transparency will build economic pressure on
publishers, which will pave the way for competition and
eventually force them to offer more affordable options.
For more information about the new federal textbooks law, click here.
This afternoon the Senate voted to block a bailout of the oil industry.
The Murkowski resolution, a.k.a the Dirty Air Act, a.k.a the Big Oil Bailout would have dismantled the Clean Air Act and barred the Environmental Protection Agency from regulating greenhouse gas pollution.
This would have been a giant step backward in our efforts to support clean energy and work for global warming solutions.
It's time for national action to cut our oil dependence, and move to a clean energy economy that prioritizes energy efficiency and clean, renewable energy. We need to hold polluters accountable for their actions. From oil spills to greenhouse gas emissions, enough is enough.
It’s been 6 weeks and the gulf oil spill disaster has become the worst
environmental disaster in US history. At this point it’s clear it
likely won’t
be stopped until August.
By then we'll see over one
hundred million gallons of oil dumped into the Gulf, poisoning our
coastlines for decades. To see the size, check out CNN's spill
tracker and for a bit of perspective, check out http://ifitwasmyhome.com
Despite
their insistence that offshore drilling is "safer than ever," we now
know that accidents can and will happen. They've
been happening for decades, and when you're talking about an
accident involving millions of gallons of oil, we can’t take the risk.
Today,
BP began airing commercials
apologizing for the accident, but no matter what they say, it's
too late to "make this right."
Today, Facebook announced
new privacy controls in response to recent complaints that their
settings are too complicated. The new, simpler, controls will be rolled
out over the next few weeks. Good, but not good enough.
You should
be the one to control what information you share, not
Facebook. Even with the new settings, Facebook will still share your information
with other companies without asking your permission first.
It’s been an unforgettable semester and year. Thank you for being a part
of it and for making sure students have a voice in America’s future.
Here are some of our biggest victories:
Passing the largest student financial aid law in history. In March, President Obama signed the largest student loan bill in history into law. The new law increases financial aid for students by $36 billion, and it won't cost taxpayers a dime because it's funded by cutting wasteful hand-outs to banks and loan companies like Sallie Mae and Citibank. Across the country 10,000 of you called, wrote, emailed, and tweeted your Congressmen asking them to take action. In addition, our DC staff worked tirelessly to bring your message to legislators and their staff.
Stopping the worst unfair practices by credit companies. In February the Credit CARD Act went into effect. This law protects students and ends some of the worst unfair practices of credit card companies, making it illegal for credit card companies to profit by tricking people into paying late. It was the outcry of students like you that passed this law, and the banks aren't happy about it - this is the first time in 40 years any law opposed by credit card companies has passed.
Helping rebuild Haiti, and fighting poverty here at home. It's been a tough year for many American families, and the earthquake in Haiti has affected millions. Through our annual Hunger Cleanup and Haiti relief fundraisers, thousands of students across the country volunteered for a day of service in their communities, planting gardens, painting, cleaning, serving food, collecting cans, and more. They also hosted date auctions, spare change drives, basketball and dodgeball tournaments, hunger strikes, and other events to raise money to donate to those in need. Together, we raised $70,000 for local agencies, Oxfam’s Haiti Relief and national efforts to combat poverty.
Building support for global warming solutions. We're calling on the Senate to build a clean energy economy that will create jobs and enhance America’s national security while protecting the environment. Across the country, we mobilized over 45,000 students and community members to contact their Senators to call for clean, renewable energy and an end to our dependence on oil and coal. From coast to coast we held events on campus and off, panel discussions, home weatherizations, video screenings, and energy saving competitions to educate thousands of people and resulting in more than 100 news stories about our work. At the University of Oregon we helped organize PowerShift
West for 500 students and young people. In New Jersey, we launched Energy Service Corps, a joint project with Americorps, to educate and engage New Jersey communities about energy efficiency.
Reforming the health care system in order to make health care affordable. Despite hundreds of millions of dollars spent by the insurance industry to stop reform, health insurance reform became law. Our priority has been to make health care affordable. This law takes unprecedented steps to lower costs for families and small businesses, and it prohibits insurers from using pre-existing conditions, errors on forms, and lifetime or yearly caps to drop your coverage or price it out of reach. It also helps young adults – a highly uninsured demographic - by allowing them to stay on their parents’ coverage until age 26.
With their new "instant
personalization" program Facebook is sharing your information with
companies like Microsoft and Yelp, and probably more to come, without
your permission.
You can block this new program, but only by changing several of your settings.
This
is ridiculous. Facebook should ask your permission before they share
information about you or your friends with other companies.
I want control of my information, and I want my information safe
and secure. There are already reports
of security holes with "instant personalization" sites that have
made personal information accessible to hackers.
As the
report explains, young people face “lasting damage” from the financial
sector and in personal finance, making it urgent that Congress pass
strong financial reform legislation.
Yesterday Senators John Kerry and Joe
Lieberman released a draft of "The
American Power Act" - a comprehensive federal climate and energy bill.
And it’s not a minute too soon. BP’s
oil spill disaster in the Gulf of Mexico and the recent tragedy in
the West Virginia coal mine are chilling reminders of the consequences
of our dependence on fossil fuels. It’s time for a change and there’s no
time to waste.
We need to start moving to a clean energy economy in America and to
start breaking our addiction to dirty fossil fuels. While that’s a tall
order, we can get started now by increasing energy efficiency and
getting our energy from clean sources like wind and solar power. Not
only will this help to rebuild our economy, but it will set us on the
path to solving global warming, reducing pollution and creating a more
sustainable world.
Thanks to Senator Kerry and Senator Lieberman’s hard work,
discussions on clean energy legislation are under way. Young people from
coast to coast are paying attention because we want to make sure
President Obama and our leaders in D.C. get it right.
The draft they released yesterday starts us on that path by finally
setting national limits on global warming pollution. It aims to cut
emissions 17% by 2020 and 83% by 2050. This is a critical first step,
but we will need even greater reductions to stop the worst effects of
global warming.
The draft also includes some provisions to help move America away
from
oil and increase investment in efficient transportation options.
Unfortunately, the draft also has some serious problems to fix
before
a vote.
It would encourage more oil drilling off America’s coasts by giving
states that allow drilling a share of the oil revenues. With oil still
spewing into the Gulf at a rate of 200,000 gallons a day, it’s clear we
shouldn’t be encouraging more off shore drilling.
It also misses an opportunity by not doing enough to promote energy
efficiency—the cheapest, cleanest and safest way to cut pollution and
build our clean energy economy.
Further, it would remove some of the power states and the EPA have to
reduce global warming pollution. States should have the freedom to use
innovative solutions, especially if they want to go above and beyond
what’s required by D.C.
Finally, the draft would create huge new investments in nuclear power
and make it easier to build new nuclear power plants. Nuclear power is
not the way to tackle global warming – it’s expensive, dangerous, and we
don’t have a way to handle the nuclear waste it creates.
But while there are lots of details to work out, today’s announcement
gets the ball rolling again on passing comprehensive energy
legislation.
The oil spill in the Gulf of Mexico could become the
worst oil spill
in history.
The spill from BP's Deepwater Horizon rig is now more than three times
the size of Rhode Island and growing by 210,000 gallons of crude oil
every day. It could be months before they can cut off the flow.
They have tried to block it, they have tried to burn it, and now the
slick is drifting toward shore, threatening every Gulf coast town from
Louisiana to Florida.
It's hard to overstate the likely damage for wildlife, Gulf coast
communities and the economy. If the oil slick hits shore, it could
poison the coastline for decades.
It was just a few weeks ago that the Obama administration announced
plans to open 200 million acres off our coastline to more oil drilling.
It's time to reconsider.
To quote Gov. Charlie Crist of Florida, a recent supporter of some
offshore drilling until he flew over the Gulf spill: "If this doesn't
give somebody pause, there's something wrong." (From
Time magazine)
In the recent Citizens
United v. Federal Election Commission decision, the Supreme Court
ruled that corporations are legally "persons," and thus have the right
to make unlimited contributions to the political committees that buy
most of the ads that inundate us at election time. In his State of the
Union address, President Obama responded to the ruling, saying "The
Supreme Court reversed a century of law that I believe will open the
floodgates for special interests ... to spend without limit in our
elections."
Last week, Congress took the first major step to
close the floodgates
opened by the decision by introducing the Schumer-Van Hollen bill.
The bill is full of good stuff: It includes bans on campaign spending
from federal contractors, foreign-owned corporations or those that
receive taxpayer-funded bailouts. And it requires disclosure of all
campaign spending, so voters can judge the credibility of political ads
run by Goldman Sachs or ExxonMobil.
The stakes could not be
higher: There is already too much money in politics, and with the
Court's recent decision, it could go from bad to worse.
Most
Americans staunchly disagree with this ruling. In a Washington
Post-ABC poll, 8 in 10 respondents said they oppose the high
court's decision, and nearly as many back congressional action to curb
the ruling.
In the weeks to come we'll be meeting with
Congressional leaders in D.C. and back in their districts to make sure
they are hearing their constituents' support.
Finally, more than 18 months after we had to bail out the Wall Street
banks with taxpayer dollars, the U.S. Senate just might do the right
thing and pass financial reform.
Big banks on Wall Street gambled with our college savings and our
parents' retirement funds. Because of their reckless investments, we
lost millions of jobs and we spent billions bailing them out. Now we
have a chance to protect consumers.
But only if we pass financial reform.
We're calling on the Senate to vote for American families, not
Wall Street banks.
We can’t think of a better way to celebrate this Earth Day than to
support a clean energy economy in America.
The Student PIRGs and
groups across the country to launch a massive petition drive - we've
pledged to do our part by collecting 10,000 signatures for a Declaration of
Energy Independence.
40 years ago, roughly 20 million
Americans participated in the first Earth Day. Shortly after, Congress
passed the Clean Air Act, strengthened the Clean Water Act, and created
the Environmental Protection Agency.
We've made real progress on
many fronts – but today we're even more dependent on foreign oil than we
were then.
The first Earth Day unleashed a movement that brought
about cleaner air, cleaner water and new protections for our parks,
wilderness and wildlife across America. This Earth Day, let's unleash
the power of clean energy to build a more sustainable future.
Sign the Declaration
and join hundreds of thousands of Americans -- from leaders of the
clean energy movement to environmentalists, veterans and your classmates
and friends -- who want to put our country on a path to a clean energy
future.
The update from Haiti is hopeful - as they move into the long-term
rebuilding effort, Oxfam's team has started focusing on cash-for-work
programs that employ Haitians to build shelters and other facilities to
aid displaced people.
Part of the money volunteers are raising
through our Hunger Cleanup will go to fund this
program as well as buy supplies for the continued efforts on the ground.
Every
donation, no matter what the size, will make a difference. So far
volunteers have raised over $20,000 through donations from their friends
and family.
You can help support these programs for displaced
and homeless people in Haiti as well as people in your own community by
asking friends and family members to make
a donation on the Hunger Cleanup website.
College just got less expensive. On Thursday Congress passed
the biggest student loan bill in history, the Student Aid and Fiscal
Responsibility Act, which will increase financial aid for students by
$36 billion. The President will sign the bill into law early next week.
This law significantly lowers student debt in two ways. First, it
increases the Pell Grant by the cost of inflation each year so that more
students can attend college and so that Pell grant recipients can
receive more aid that does not need to be repaid. Second, graduates with
low salaries after graduation will never be required to send in a
payment higher than 10% of their monthly salary AND can see their loan
completely forgiven after 20 years!
Perhaps best of all, it won't cost taxpayers a dime because it's
funded
by cutting wasteful hand-outs to banks and loan companies like Sallie
Mae and Citibank. By ending these corporate hand-outs, Congress voted
to support students, not banks.
As one of the nation's top student advocacy organizations, we were a
key player in shaping this bill. We've been campaigning hard for this
law for nearly a year - our dedicated staff in DC have been working the
hallways in the Capitol to build support for student aid, while on
campus across the country, tens
of thousands of you have spoken out in favor of this reform.
“Today Congress voted to make historic investments into financial aid
by ending
sweetheart deals for big banks and lenders. This is a
game-changing bill that banishes banks from the federal student loan
program while aiding students mired in education debt.
“This investment increases Pell grant funding at a time when tens of
millions of students are assuming record levels of debt to pay for
college. The number of students graduating with over $40,000 in loan
debt has increased ten-fold in the last decade. A massive $36 billion
infusion into the need-based Pell grant program will provide immediate
relief to student borrowers. Not only are Pell grants stabilized for
over eight million students, the aid is increased substantially over
the next 6 years. The bill also expands on the Income Based Repayment
program making loan repayment more manageable for graduates, benefits
that will extend to over one million more borrowers.
“One of the best things about this bill is that it doesn’t cost
taxpayers a dime. For years, the federal government has been funding
middlemen lenders to make loans to students. These lenders make federal
loans at almost zero risk and full profit, while providing no tangible
benefits to students. Instead, all federal lending will occur through
the efficient and effective Direct Loan program.
“The federal Direct Loan program will increase student protection
from aggressive private loan marketing. Lenders used inducements to
convince financial aid offices to push private student loans on students
and families. These private loan products are more akin to credit
cards with variable interest rates as high as 18% and limited repayment
options and benefits. Originating loans from the federal government
will give the time students need to assess their financing options in a
fair setting.
“This legislation helps renew the promise of student aid programs
for the tens of millions of students who rely on grants and loans to
achieve a college education. We applaud Congress for prioritizing the
Pell grant program, and education, and we look forward to President
Obama’s final signature.”
Statement of Rich Williams, Higher Education Associate,
representing hundreds of thousands of students across the country, on
the passage of historic student aid legislation in the House.
FOR IMMEDIATE RELEASE: March 21,
2010
CONTACT: Rich
Williams Higher
Education Associate 602-228-0684 rwilliams@pirg.org
WASHINGTON, March 21 – Higher Education Associate Rich Williams issued a
statement on the passage of the final reconciliation package today by
U.S. House of Representatives:
“Today the House of
Representatives voted to pass historic financial aid legislation which
renews the promise of federal aid programs that have failed to keep pace
with the financial realities of family incomes and college costs.
In
a student aid system that has been de-prioritizing federal grant
programs, this bill will remove wasteful and unwarranted middleman
subsidies that are currently going to big banks and lenders and direct
that money to student grant aid. This investment will provide immediate
relief for millions of students who might otherwise abandon their
college aspirations or drop out of college all together when forced to
rely on loan debt to pay for it.
Passage of this bill signals a
shift in federal priorities. We applaud the House of Representatives for
renewing the commitment to access to higher education and urge the
Senate to swiftly pass the legislation in the coming week.”
In
the last few weeks hundreds of students have submitted "I support clean
energy because..." letters to their Senators, and they make one thing
clear: there are countless reasons why it's time to bring clean energy
to America.
Join thousands of students who are calling our Senators this week to let them know we support clean energy: http://studentpirgs.org/72hours
We're running out of time to get our Senators to pass a national clean energy plan - but we're in it to win it.
By
launching a 21st century energy plan for America, we can create
millions of green jobs, jump start the economy, and begin to solve
global warming.
We've teamed up with dozens of organizations
across the country to host this 72 hour phone blitz to our Senators
because the more calls we make, the more they'll pay attention to us.
We all have our own reasons for supporting clean energy. And our Senators need to hear them all.
Until
today, it was perfectly legal for credit card companies to profit by
tricking people into paying late and then tripling the interest rate on
their balances.
Not anymore.
The Credit CARD Act
goes into effect today and includes this and other protections from
abusive practices the banks have used to rip us off. It also offers
college students additional special protections. Click here to read what's in it for you.
Students
have an average of almost $3,000 in credit card debt when they graduate
college. We use credit cards to pay for textbooks, transportation, and
even tuition. Banks have used aggressive marketing tactics and abusive
terms and conditions to trap us into deep credit card debt. According
to Inside Higher Ed,
the new law "Includes a set of changes aimed at protecting young
consumers -- and in some cases college students specifically -- from
excessive credit card debt." U.S. News and World Report explains that young consumers are "coveted" by banks and credit card companies.
It
was the outcry of students like you that passed this law, and the banks
aren't happy about it - this is the first time in 40 years any law
opposed by credit card companies has passed!
Having
high-speed rail connecting all the major cities throughout the country
would help our economy by providing thousands of sustainable jobs,
reduce carbon emissions that cause global warming, clear up highway
congestion, reduce our dependence on foreign oil, and improve our
quality of life.
It's
going to take a long-term commitment from our local and national
leaders to plan and fund a national rail system. As we rebuild our
transportation system, let's make sure we do it right.
Haiti
just experienced a massive earthquake. We don't yet know the full
ramifications of this disaster, but the people of Haiti will need help
from around the world to meet both their immediate needs and the long
term effort to rebuild homes, schools, hospitals and cities.
Our
Hunger and Homelessness campaign will be holding fundraisers on
campuses in the months ahead to make sure organizations on the ground
have the resources to get food, medicine and supplies to the people
that need them.
Sign up to volunteer and help fundraise on your campus here.
It's easy to organize a fundraiser on campus. Learn how by downloading our Response Kit.
Donations
are urgently needed - right now, we're recommending people direct
donations to our friends at Oxfam through their website http://oxfamamerica.org. Oxfam has four offices in Haiti and over 200 highly-experienced aid workers.
Please contact the staff of the National Student Campaign Against Hunger and Homelessness with questions at Natalie@studentsagainsthunger.org.
A
handful of PIRG students attended last Wednesday's forum at the White
House on global warming and clean energy. The forum gave young people a
chance to speak directly to administration officials, including Ken
Salazar (Secretary of the Interior), Hilda Solis (Secretary of Labor),
Steven
Chu (Secretary of Energy), Lisa Jackson (EPA Administrator), and Nancy
Sutley
(chair of the White House's Council on Environmental Quality).
In his State of the Union
Speech last night, President Obama recommitted to an increased
investment in higher education, reaffirming that investment in higher
education is essential to our country’s recovery and long-term
strength.
Obama urged Congress to increase Pell grants by passing the
Student Aid and Fiscal Responsibility Act (SAFRA), help students better
manage their crushing debt loads, and create a $10,000 education tax
credit.
The passage of SAFRA will increase the Pell grant
(the government’s need-based financial aid program) by at least $40
billion dollars by eliminating wasteful, unwarranted subsidies to banks
and lenders, and redirecting the money to students.
President
Obama also called for an expansion of the federal Income Based
Repayment program to help students manage their rapidly increasing
debt. His proposal would cap students' monthly federal loan repayments
at 10% of their discretionary income and forgive their federal debt
after 20 years or repayment.
Increased tuition costs have
resulted in students and families over-relying on loans to pay for
college. In 2008 students graduated with an average of a $23,200 in
student loan debt. Too many students can't go to college because of the
costs, don't graduate because their debt gets so high they have to drop
out, or after graduation have to put off marriage, children, and home
purchase because of their crushing debt. On campuses across
the country, Student PIRGs' student interns and volunteers are working
to raise the alarm on student debt and calling on their elected
official to support President Obama's plan increase financial aid for
students.
Today, the House of Representatives took an historic step toward a new clean energy economy and a healthy
future by passing the American Clean Energy and Security Act.
We're going to need to do much more in order to
make the dramatic shift we need in our energy policy and avoid the dire
consequences that scientists predict if we don't address global
warming. However, the first
step is always the hardest, and the House should be applauded for
taking it.
Next the bill will go to the Senate, where it will
face another tough fight. We look forward to building even more support
for clean energy solutions.
The Obama administration last Thursday called a "time-out" on new road-building in nearly 50 million acres of our national forests. Despite President Obama's promise to protect these forests and restore the 2001 Roadless Rule, Bush-era officials still working at the U.S. Forest Service had been moving to allow the timber, mining and oil industries access to roadless areas within the system. On May 28, the Secretary of Agriculture, Tom Vilsack, ordered that these forests be protected from road building. Now we're pushing for permanent protection of these places through full restoration of the Roadless Rule.
President Obama recently signed into law strong legislation, called the “Credit Card Accountability, Responsibility and Disclosure (CARD) Act”, that will halt the most egregious abuses by the credit card industry. This is a big victory for students and all consumers.
This is a big victory for students and all consumers! We've been
working on this issue for a while now – working on campus to educate
students and others about bad credit card practices, plus the report we
issued last year, The Credit Card Trap.
For too long, owning a credit card company has been a license to
steal. Over the last few years, the banks increased their use of
abusive tactics, such as changing due dates so they could trick
consumers into paying late. Worse, they charged a double whammy for
paying late - a high late fee first and then tripled interest rates of
36% APR or more. They also started charging good customers higher rates
because they supposedly paid some other creditor late (this is called
"universal default"). And when that wasn’t enough, they started raising
the rates of good customers for no reason at all.
These rip-offs have finally caught up with them. Gouging everyone,
even good customers who paid on time, caused thousands and thousands of
people who just want a fair deal to contact Congress and the Federal
Reserve.
The CARD bill doesn't fix everything, but it does eliminate a lot of unfair practices, including:
Credit card issuers could not extend
credit to consumers under the age of 21 unless the person has an
independent means to repay the loan, or has a cosigner with such
ability. That’s the same way other adults are treated. Consumers under
the age of 21 could choose whether to receive credit card
solicitations.
Restricts credit card companies from
giving away free gifts on or near campus and requires disclosure of
credit card company exclusive marketing arrangements with colleges.
Unjustified and retroactive interest
charges. Card companies could not hike interest rates retroactively on
balances accrued before a rate increase takes effect (with minor
exceptions) unless the cardholder is more than 60 days late in paying a
bill. If such interest rate increases occur, they must lower the rate
after six months of on-time payments. Card companies would not be able
to raise interest rates in the first year after a card account is
opened.
Universal default on existing balances.
Credit card issuers could not increase a cardholder's interest rate on
existing balances based on negative information about other bills
unrelated to their credit card.
Excessive and growing penalty fees.
Penalty fees would have to be reasonable and proportional to the late
or over-limit violation. Card issuers could not charge over-limit fees
unless the cardholder has agreed to allow over-limit transactions.
Unfair billing practices. Card companies could not charge interest on any portion of a balance that is paid by the due date.
Pay-to-Pay. Card companies could not
charge customers a fee to pay their bill, except for expedited service
provided by a service representative.
The new law also reins in the deceptive
marketing of freecreditreport.com—those commercials may be funny, but
the credit reports aren’t free.
Passage of this historic credit card reform legislation will stop
big credit card companies - many of which are benefiting from TARP
funds - from cheating Americans out of their hard-earned money.
A series about the surge in consumer debt and the lenders who made it possible.
Colleges Profit as Banks Market Credit Cards to Students
Bank of America employees on the campus of Michigan State University in
East Lansing, Mich., offered give-aways like water bottles, backpacks,
games and other items, trying to persuade students to sign up for
credit cards and other banking services.
EAST LANSING, Mich. — When Ryan T. Muneio was tailgating with his parents at a Michigan State football game this fall, he noticed a big tent emblazoned with a Bank of America
logo. Inside, bank representatives were offering free T-shirts and
other merchandise to those who applied for credit cards and other
banking products.
Fabrizio Costantini for The New York Times
Bank of America employees on the Michigan State campus offered
giveaways like water bottles, backpacks and games to persuade students
to apply for credit cards and other bank services.
“They did a good job,” Mr. Muneio, 21 and a junior at Michigan State, said of the tactic. “It was good advertising.”
Bank of America’s relationship with the university extends well beyond
marketing at sports events. The bank has an $8.4 million, seven-year
contract with Michigan State giving it access to students’ names and
addresses and use of the university’s logo. The more students who take
the banks’ credit cards, the more money the university gets. Under
certain circumstances, Michigan State even stands to receive more money
if students carry a balance on these cards.
Hundreds of colleges
have contracts with lenders. But at a time of rising concern about
student debt — and overall consumer debt — the arrangements have
sounded alarm bells, and some student groups are starting to push back.
The relationships are reminiscent of those uncovered two years ago between student loan companies and universities. In those, some lenders offered universities an incentive to steer potential borrowers their way.
Here at Michigan State, the editors of the student newspaper wrote
this fall that “it doesn’t take a giant leap for someone to ask why the
university should encourage responsible spending when it receives a cut
of every purchase.”
At Arizona State University,
students set up a table on campus last spring to warn of the danger of
debt and urge students to support limits on on-campus marketing.
The
contracts, whose terms vary but usually involve payments to colleges or
alumni associations that agree to provide lists of students’ names,
have come under harsh criticism in Washington.
“That is absolutely outrageous, the sharing of students’ information with the banks,” Representative Carolyn B. Maloney, Democrat of New York, who oversaw a June hearing on campus credit card marketing, said in a recent interview. “That should be outlawed.”
Fabrizio Costantini for The New York Times
A Fifth Third Bank display offered bottles of water, tuition raffles
and a bicycle as an inducement to get incoming freshmen at Michigan
State University to open credit card and other accounts.
College
campuses are one place that young Americans are introduced to credit
and the possibility of spending beyond their means, a problem now
confronting the nation as a whole. For banks, the relationships are a
golden marketing opportunity. For colleges, they are a revenue source
at a time of declining public funding. And for students, they help pay
the bills and allow more shopping.
But debt incurred in college becomes a serious burden at graduation, especially in a recession in which jobs are scarce. A survey of more than 1,500 college students by US PIRG
in Washington found that two-thirds had at least one credit card.
Seniors with balances had an average debt of $2,623 on their cards.
University officials say that their agreements with card issuers comply with the law and bring in valuable revenue.
“It
provides money for scholarships and other programs,” said Terry R.
Livermore, manager of licensing programs at Michigan State. He said
that the program was aimed primarily at alumni and the university would
not include sharing student information in future credit card
contracts. “The students are such a minuscule portion of this program.”
Jennifer
Holsman, executive director of the alumni association at Arizona State,
said the association tried to teach students about responsible uses of
credit. “We work closely with Bank of America to provide educational
seminars to students in terms of being able to get information about
how to pay off credit cards, how not to keep balances,” she said.
Credit card issuers say that they try to educate students to use cards
responsibly and that the cards they offer on campus have more
restrictive terms than cards offered to alumni.
“The available
credit for undergraduates is capped at $2,500,” said Betty Riess, a
spokeswoman for Bank of America. “We want to take a fair and
responsible approach to lending because we want to build the foundation
for a longer-term banking relationship.”
Ms. Riess said the bank
had agreements with about 700 colleges and alumni associations, making
it one of the biggest, if not the biggest, card issuer on campuses. She
said that only 2 percent of the open accounts under those agreements
belonged to students, but also said it was not possible to determine
what percentage of program revenue resulted from fees and charges on
those student cards.
Stephanie Jacobson, a spokeswoman for JPMorgan Chase,
wrote in an e-mail message that the bank had fewer than 25 contracts
with colleges or alumni associations and that while some of the
contracts gave it the right to ask for and use lists of student names
and addresses, the bank had not done so since 2007.
That may be
because football games present a marketing opportunity that requires no
address information. Abigail D. Molina, a second-year law student at
the University of Oregon, applied in 2007 for a Chase Visa offered at a tent outside a football game. In exchange, she received a blanket.
I mostly wanted the blanket,” Ms. Molina said. She added that this
was her second university credit card. In 1994, when she was an
undergraduate at the university, she applied for a card at a booth on
campus and then accumulated about $30,000 in debt, almost all of it on
the card. In 2001 she filed for bankruptcy. Looking back, she said it
was “shockingly easy” to get the card, even as a first-year student.
Mr. Muneio, the Michigan
State student, said he did not apply for a Bank of America card because
he already had two Visa cards. “The last thing I need is another
account to keep track of.”
Many students are unaware of the
contracts that universities have with credit card issuers and do not
question the presence of marketers on campus or applications in their
mailboxes, despite recent protests on a few campuses.
Sometimes,
the contracts have confidentiality provisions. Universities may try to
distance themselves, stating that the contracts are only between alumni
associations and banks. But the universities provide alumni groups with
lists of current students’ names, addresses and telephone numbers,
which the groups pass on to banks.
The New York Times obtained
information about and, in some cases, copies of contracts between
lenders, public colleges and their alumni associations using open
records requests. Because private colleges are not subject to open
records laws, they are not included.
While most universities contacted for this article did not provide detailed financial information on the contracts — the University of Pittsburgh, for example, confirmed only that it had an agreement — two did share numbers.
The alumni association of the University of Michigan
is guaranteed $25.5 million over the term of its 11-year agreement with
Bank of America. Under the agreement, the association agreed to provide
lists of names and addresses of students, alumni, faculty, staff,
donors and holders of season tickets to athletic events.
Much
of the money goes toward scholarships, said Jerry Sigler, vice
president and chief financial officer of the alumni association. He was
unsure what students were told about the program.
“Students are
generally told how they can opt out of having their information
publicly displayed in directories or provided in response to requests
like this,” Mr. Sigler added. “But it’s not to my knowledge specific to
the credit card program.”
Michigan State University gets $1.2
million a year but is guaranteed at least $8.4 million over seven
years, according to its agreement. The contract calls for a $1 royalty
to the university for every new card account that remains open for at
least 90 days, $3 for every card whose holder pays an annual fee, and a
payment of a half percent of the amount of all retail purchases using
the cards.
For cards that do not have an annual fee, the bank
pays $3 if the holder has a balance at the end of the 12th month after
opening an account, a provision that appears to give the university an
incentive to get cardholders into debt.
A few schools have adopted policies that prohibit sharing student contact information.
Ball
State University’s alumni association, which has a contract with
JPMorgan Chase, does not provide information on students, said Ed
Shipley, executive director of the association. “Who we market to is
our alumni because that’s our purpose,” he said. However, the bank is
permitted to set up marketing tables at athletic events.
The
University of Oregon, whose alumni association also has a marketing
agreement with Chase, stopped providing student addresses as concern
grew about student debt, according to Julie Brown, a university
spokeswoman. The university still permits marketing booths at athletic
events.
Some research suggests that students may be using credit
cards less frequently, in favor of debit cards linked to their bank
accounts. A survey last spring by Student Monitor, a Ridgewood, N.J.,
company that tracks trends on campus, found that 59 percent of
undergraduate students had debit cards, up from 51 percent in 2000.
But
universities have arrangements with banks that offer debit cards too,
perhaps raising some of the same issues that the credit card deals do.
At New Mexico State University, for example, students are given the option of opening a bank account with Wells Fargo if they want to convert their campus identification into a debit card.
The
accounts are not mandatory, said Angela Throneberry, assistant vice
president for auxiliary services at the university. But, she said,
“There’s some revenue sharing that happens as part of this.”
A version of this article appeared in print on January 1, 2009, on page B1 of the New York edition.
Add this to
the list of the country's financial woes: Credit card companies are aggressively
targeting college students, many of whom are naïve about money matters and
vulnerable to predatory offers that can get them permanently mired in debt.
According to an eye-opening survey by the
United States Public Interest Research Group, or U.S. PIRG, which is an advocacy
organization, some students reported receiving hundreds of credit card offers in
a year. The report also described how companies lure cash-starved students with
gifts of clothing and free food. In one flagrant case in Ohio, students who showed
up for the food were required to fill out credit card applications before they
could eat.
A
half-dozen states have placed restrictions on how credit cards can be marketed
at public colleges. Congress is considering sensible bills that would restrict
the amount of credit and the number of cards that students could be offered.
Lawmakers should also focus on the lucrative and often secret deals that
universities and their alumni associations regularly cut with credit card
companies.
Those deals
— which resemble the now outlawed student loan kickback deals — often grant
companies the exclusive right to market to a college’s students. In some cases,
the colleges get a cut of what the students spend, which makes the school a
partner in the plundering of young peoples’ meager assets.
Congress
must insist that these deals be made public and universities and alumni groups
must insist that students be given fair deals from credit card companies.
With
financing from the Ford Foundation, U.S. PIRG has begun a national campaign
urging schools to adopt some common-sense principles that would help shield
students from credit card marketers and financial ruin.
The group
calls on universities to stop selling the names and contact information of
currently enrolled students to credit card marketers. It also says that schools
should ban marketers from using gifts to entice students to sign up for credit
cards, and it urges schools to do more to educate students on managing debt
responsibly.
Most
importantly, the group calls on schools that still decide to cut deals to only
do business with credit card companies that steer clear of commonly used but
unscrupulous credit card terms that take advantage of students. That means an
end to hidden fees or unreasonable penalties, including universal default, under
which interest rates go up when the customer fails to pay a bill not related to
the credit card account.
Schools
need to reform their credit card practices. If they don’t move quickly,
lawmakers must do it for them.
One
thousand professors
from over 300 colleges in all 50 states released a statement declaring their preference for high-quality,
affordable textbooks, including open textbooks, over expensive commercial
textbooks.
Open
textbooks are high
quality open-access textbooks reviewed
and written by academics that can be used online at no cost and printed for a
small cost. Open textbooks are already used at some of the
nation’s most prestigious institutions, like Harvard, Caltech and Yale.
Textbooks cost students an average of $900 per year, which is a quarter of tuition
at an average four-year public university and nearly three-quarters of tuition
at a community college, according to the GAO. Research conducted by The Student PIRGs
identifies publisher tactics as the primary cause of escalating prices.
Bundling textbooks with unnecessary supplements forces students to purchase
items they do not need; unnecessary new editions undermine the used book
market; and withholding critical price information keeps faculty in the dark.
“As faculty members, our top priority is to choose the
textbook that is best for our students. We share concerns about
affordability, and face similar frustrations with publisher practices,” said
Sandra Schroeder, Chair of the American Federation of Teachers Higher Education
Program and Policy Council. “Open textbooks and other affordable options,
when appropriate for a course, are a win-win for everyone.”
It’s been an unforgettable semester and year. Thank you for being a part
of it and for making sure students have a voice in America’s future.
