A CAMPUS REVOLT -- AGAINST CREDIT-CARD COMPANIES

Edited by Douglas Harbrecht

With their ubiquitous flyers, on-site giveaways, and bookstore promotions, the nation's major credit-card issuers have become as much a part of undergraduate campus life as Frisbees and the breezy sounds of the Grateful Dead. Some 35 of the nation's top 50 card issuers now compete in the college market, each hoping to salt away future lists of loyal, high-salaried customers.

Now, some campuses have had enough. At 10,000-student Louisiana Tech in Ruston, La., the student government, with the consent of administrators, has banned credit-card marketers from school grounds. While on-campus card marketing has come under increasing attack from politicians and school administrations nationwide, Louisiana Tech's may be the first student-led movement against the card companies.

Topping the undergraduates' list of gripes: Aggressive vendors, who set up "freebie" tables 98 times during the 1996-97 school year, were turning Tech's student center into a noisy bazaar. What's more, say students, card company come-ons were contributing to some undergrads' mounting debt problems. "The purpose of our institution is to educate," says junior Jessica Jordan, secretary of the Student Government Assn. "It's not to sell for the credit-card companies."

Though the majority of students sign up for credit cards via direct mail (they receive an estimated 15 to 20 solicitations per semester), the card companies rely on ground-level marketing to keep their name in public view. And for the most part, they've done it with little interference: An estimated 80% of the nation's colleges and universities permit some form of on-campus card solicitation. Many issuers pay modest finder's fees to student organizations, which use on-campus "tabling" -- typically a foldout table stocked with giveaway T-shirts, mugs, or posters -- to recruit fellow students.

Private companies are also on the scene. One, Philadelphia-based Campus Dimensions, covers more than 1,000 schools nationwide, setting up 15,000 to 20,000 exhibits each year for such clients as AT&T Universal Card, MasterCard, Sunoco, and Unocal. Issuers have also made their way into campus bookstores, paying to stuff card applications inside shopping bags. All of this attention has helped boost card-holding among four-year, full-time undergraduates from an estimated 65% in 1993 to 77% today, says Eric Weil of the market-research firm Student Monitor.

The marketing blitz, coupled with the country's rising personal bankruptcy rate, has begun to raise the ire of university officials and local and national politicians. Critics charge that card companies are offering millions of dollars in credit without showing students how to use it responsibly. "There is a perception that these are people who can't protect themselves or educate themselves," says Lee Spirer, a management consultant at Booz Allen & Hamilton.

The threat of mismanaged credit recently prompted Widener University officials to end credit-card soliciting on their Chester (Pa.) campus. For many students, "it's almost like someone has just put $1,000 in their pocket and they don't know how long it will take to pay back," says Craig J. Loundas, dean of student life at Widener. Card marketing came under congressional scrutiny last summer in House hearings sponsored by Joseph Kennedy (D-Mass.) and Carolyn Maloney (D-N.Y.). And dozens of individual horror stories -- in which students were forced to drop out of school to pay tens of thousands of dollars in credit-card debt -- have compelled state legislators in Massachusetts and New York to introduce bills that curb on-campus soliciting.

Despite these stories' emotional pull, it remains unclear just how much students are falling into credit trouble. On one hand, young adults have more access to credit than ever before, says Alan Blair, director of credit management for Nellie Mae, a federal nonprofit provider of education loans. "Ease of access is really staggering, when you consider most college students have just a part-time job," adds Blair. A 1997 Nellie Mae survey of 350 loan applicants found that 65% of the undergraduates had credit cards, with an average available credit limit of $6,122. Of those carrying a balance, the average outstanding amount was $2,226. A similar study by Claritas Inc., a market research firm, showed that college students' average balance due jumped 134% from 1990 ($900) to 1995 ($2,100).

On the other hand, card companies report that college students pay back their balances at a rate equal to -- and in some cases, higher than -- customers at large. That's the case for the AT&T Universal Card, says a company spokesman. It's also true for MasterCard, where college-student delinquencies run between 3% and 3.5%, the same range as for all credit-card users. "There are a lot of misperceptions out there about college students and credit cards," says Charlotte Newton, vice-president for consumer affairs at MasterCard. "If anything, students are probably more responsible." Skeptics claim that parents often bail out children with overextended credit and that the true delinquency rate is thus higher than reported.

As the protest at Louisiana Tech shows, however, card companies are being put on the defensive about how they market -- and to whom. To help stave off criticism, MasterCard has launched credit-education ads on MTV and in popular youth magazines such as Rolling Stone, Spin, and Wired. MasterCard won't disclose how much it's spending on the campaign.

Citibank and First USA tie some of their product pitches to informal credit-education seminars typically held in dorms and fraternity houses. "If you're going to be at a credit seminar, you're going to be more responsible in the first place," says Larry Chiang, founder of $11 million United College Marketing Services, which collects up to $25 for every application its seminars bring in for a sponsoring bank.

"All of this started just from the fact that credit-card companies are a nuisance on campus," argues Chiang. Indeed, to appease the new generation of marketing-leery students and administrators, card companies and issuing banks will likely have to revamp their product pitches. That could mean everything from scaling back on-campus soliciting to eliminating product freebies, and perhaps even adding stringent warnings on card applications and statements. For purveyors of plastic, it seems, campuses may no longer be as fertile a breeding ground for future card-holders.

By Dennis Berman in New York