When University students, faculty or alumni apply for Chase credit cards with the UO logo on it, they aren’t just displaying school pride. They are also helping to line the wallet of the University of Oregon Alumni Association.
Everywhere from national television news to the U.S. Congress, marketing relationships between banks and university alumni associations have come under national scrutiny in recent months, and UOAA’s contract with JPMorgan Chase is among them.
For more than 20 years, the UOAA has done business with U.S. Bank, First USA and a number of other banks, marketing a University credit card that displays the University logo or an image of Deady Hall.
UOAA Executive Director Dan Rodriguez said the current contract permits Chase to table at football games and in the EMU, but Chase hasn’t solicited in the EMU. The contract also provides Chase with alumni names.
Although a recent New York Times article stated that the UOAA “stopped providing student addresses as concern grew over student debt,” UO spokesperson Julie Brown said the Chase agreement simply doesn’t require the University to provide student contact information.
Classified for tax purposes as a charitable organization, the UOAA markets Chase credit cards to help fund the association’s four renewable presidential scholarships offered to incoming freshmen.
Rodriguez said the Chase contract restricts him from disclosing how much the association profits from marketing the cards, but he said it makes little on credit-spending.
UOAA Assistant Executive Director Uri Farkas describes the UOAA as “interdependent” of the University and said it receives only “a small bit of funding” from the University.
However, critics say marketing university credit cards encourages student credit debt and constitutes an inappropriate relationship between colleges and credit lenders.
Last summer’s congressional hearing, “Problem Credit Card Practices Affecting Students: The Need for Legislative Action,” focused on bank-university contracts and identified ways in which students are targeted by such marketing.
Christine Lindstrom, director of the Higher Education Debt Project, testified at the hearing and reported that 76 percent of students in a national study said they have stopped at tables to consider credit card offers.
Rodriguez said the UOAA markets only to alumni and, while it cannot stop a student from obtaining a card at tabling events or online, it doesn’t target students.
Brown said the association’s previous card marketing contracts with U.S. Bank, First USA and others may have included a provision for student contact information. Rodriguez could not confirm or deny the details of past contracts, but he said it was likely the first contract with U.S. Bank did provide student names and addresses.
“I believe (the contract) was initially marketing to students,” Rodriguez said. “I’m very sure. But we’ve been out of this for at least 15 years. We don’t directly market to students.”
Rodriguez said the UOAA wants to market a good value to alumni, and he is confident that the rates and terms of the Chase card benefit the roughly 10,000 alumni who carry the card.
“A lot of alumni like the idea that the Oregon logo is on it, and they know they’re helping the University, in this case the Alumni Association, do some good things,” he said.
Rodriguez added that alumni can opt out of UOAA marketing programs by asking to have their names removed from the list.
Despite this, for some the UOAA marketing on behalf of credit lenders is just bad business.
Lindstrom, who represented the U.S. Public Interest Research Group at the hearing, recommended that Congress prohibit credit card sponsorship by universities and university affiliates.
Mark Phelps, a University marketing instructor, said that determining whether the UOAA’s relationship with Chase is appropriate lies at least partly in the association’s mission.
“You have this organization that is quasi-independent, yet the sole reason for existing is to serve, arguably, the mission of the University,” he said. “You have students who are not alumni, but are going to be a part of the target market as soon as they graduate. You have to look at its legal aspects, the entity’s own mission and also ethically. Ideally, the (UOAA’s) action would be consistent with all three.”
In an era of high consumer debt and credit card companies that aggressively target students, Director of Financial Aid Elizabeth Bickford said federal aid programs treat student credit debt blindly. However, she said, credit debt can be a danger to students.
“They borrow so much money sometimes, they can’t stay in school,” she said. “The debt affects how many hours they have to work, how many jobs they take. They might have to cut down to part-time (in school). It’s really important that people get a handle on their credit debt.”
Brett Thurman, president of the undergraduate student government at the University of Illinois at Chicago, advocated on behalf of students at the congressional hearing on credit card marketing.
“My fellow students … tell stories of taking a year off to pay down bills and credit card debt, leaving school indefinitely until they can get back on track financially, or joining the armed forces because it is one of the few ways to recover from the financial black hole the student now finds him or herself in,” Thurman said in his testimony.
Rodriguez is sympathetic to the concerns raised by the onslaught of criticism and the worry about student debt, but he said obtaining the card is a choice, and the responsibility of using credit carefully falls on the individual.
“Everyone goes out and gets credit,” he said. “You go out and refinance your home, it’s a choice.”
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UO credit cards profit alumni association
Daily Emerald
January 26, 2009
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