Did you know some of the giant monster mega banks have been paying massive kickbacks to universities and alumni groups for the right to push debt to students?
The banks are buying lists of home addresses, phone numbers and other personal info so they can offer credit cards directly to young people. College students are the most profitable targets, and they have deep-pocketed parents who will step in and pick up the tab if necessary.
Kickbacks on business with ‘official banks’ are egregious
The banks are acting like bank robbers minus the gun. Nobody is worse than Bank of America, which at one time had contracts with 700 schools and alumni groups. Several years ago, The New York Times reported Bank of America paid $8.4 million in kickbacks to Michigan State for names, addresses and the right to use the university’s logo in marketing materials.
Be wary any time a big bank is positioned as the ‘official bank’ of a school. Chances are you’ll be getting a raw deal.
The more students who get into debt, the larger the kickbacks become. This kind of behavior should be criminalized. And shame on the schools for selling their own students down the river.
Students themselves are beginning to revolt. At Arizona State University, students have in the past set up booths on campus to warn incoming freshman away from this potential danger. Likewise, the student newspaper at Michigan State ran several editorials to raise awareness.
As always, a Bank of America rep is welcome to come on the show and explain why what they’re doing isn’t wrong. An explanation from state-supported universities that take the kickbacks would also be nice.
If you’re the parent of a college-bound teen, you must educate your child about this issue. As an early alternative, try getting your high school junior a credit card with a low limit so you can monitor use and teach responsibility while they still live under your roof.
For more money-saving campus advice, see our Education section.