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Increasingly, colleges are forging agreements with credit card companies, whereby schools profit from student borrowing. It may be good business, but persistent credit card marketing on campus and subsequent heavy use by students is putting many on a fast track to debtors’ prison.

Credit card company – college deals take a variety of forms. A common deal revolves around what are called “affinity agreements,” whereby a colleges’ logo is emblazoned on a credit card. In exchange for a college’s imprimatur, the relevant credit card company sends back to the school in question, their alumni association, or their athletics department a share of revenue generated from student or alumni purchases.

The University of Tennessee, for example, used to have a multi-year . It’s now in the midst of a similar $10 million contract with Chase. , which enrolls over 60,000 students, has an affinity agreement arrangement with Bank of America, though the terms have not been disclosed.

Other credit card company – college deals involve institutions providing ready access to students and student contact information. Colleges provide credit card companies with personally-identifiable information about their students in exchange for cash payments. The companies then use the data — which can include permanent addresses, e-mail addresses, and local telephone numbers — to market credit cards directly to students. Some colleges go even further, providing companies with face-to-face access to students — allowing salespeople, for example, to set up marketing tents in central campus hubs.

Until recently, the University of Iowa had a deal with in exchange for students’ local mailing address (six times during the year), e-mail address (four times), local telephone number (twice), and current home address (once). Bank of America also was also allowed to market cards on campus 14 days a year. The level of access doubtlessly contributed to added financial strain to University of Iowa students who already carry in the nation. [Note: After the ran a series of articles calling attention to the arrangement, the University of Iowa .]

Nationally, big money is involved in these credit card company – college deals. According to , Bank of America has agreements with roughly 900 colleges across the United States. A estimates that as of the end of 2006, 320 million college-affiliated credit cards were in use, accounting for $849 billion worth of transactions. Revenue sharing with institutions of higher education resulted in an

Debtor Nation

Students pay a heavy price for credit card companies’ hefty profits. A by a federation of public interest groups (U.S. PIRG) found that college seniors who didn’t pay off their monthly credit card statement reported carrying an average balance of $2,623. Those with student loans reported even more debt. College seniors with previous defaults carried an average balance of $4,116. But the credit card companies aren’t just interested in student borrowing.

Going after students is a long-term play by credit card companies. Investing millions to gain access to campuses may seems like a substantial payment, but students are a captive and inexperienced market likely to generate both short, and more importantly, large, long-term returns.

for years, meaning companies can attract thousands of potential lifetime customers for what is essentially a pittance given how much customers will rack up in future credit card debt. The average American credit-card holding household owes $9,659 on their cards; that’s . ¹ú²úÊÓƵ two million American households owe more than $20,000 on their credit cards.

We’ve seen the myriad and schools use revenue and put them at risk of severe financial difficulties. Maybe the schools should start thinking about long-term plays just as the credit card industry does. It’s pretty hard to make alumni donations when a large share of your monthly income is going to pay off the plastic.