Report to Congressional Requesters

United States General Accounting Office

GAO

June 2001 CONSUMER

FINANCE

College Students and

Credit Cards

GAO-01-773
Page i GAO-01-773 College Student Credit Cards

Letter 1

Results in Brief 2

Background 5

Credit Cards Have Both Advantages and Disadvantages for College

Students 8

Studies Provide Limited Information on College Students and

Credit Cards 15

Universities’ Policies on Credit Cards Differ, But Most Focus on

Solicitation 25

Card Issuers Customize Business Strategies for College Students 34

Conclusions 42

Agency Comments and Our Evaluation 43

Appendix I Scope and Methodology 47

Appendix II State Legislation Regarding Credit Card

Solicitation at Institutions of Higher Education,

1999 to 2001 53

Appendix III Additional Studies of College Students and

Credit Cards 67

Appendix IV Card Issuer Code of Conduct 69

Appendix V GAO Letter to Card Issuers 71

Appendix VI GAO Contacts and Staff Acknowledgements 73

Tables

Table 1: Minimum Repayment Schedule on a $2,000 Credit Card

Loan at 19 Percent 10

Contents
Page ii GAO-01-773 College Student Credit Cards

Table 2: Proposed or Enacted State Legislation on Credit Card

Solicitation at Institutions of Higher Education from 1999

to 2001 54

Figures

Figure 1: Nonacademic Entities of a University 6

Figure 2: Proportion of Debtors Filing For Bankruptcy by Age

Group 13

Figure 3: Percent Growth in Bankruptcy Filings By Age of

Petitioner—1991 to 1999 14

Figure 4: Comparison of TERI/IHEP Study and Student Monitor

Study Results on College Student Credit Card Acquisition

and Payment 16

Figure 5: Number of Credit Cards in Students’ Name 18

Figure 6: Credit Limits on College Students’ Cards 19

Figure 7: Categories of College Student Credit Card Charges 22

Figure 8: Average Monthly Balances on Student Credit Cards for

Students Who Carry a Balance, Reported in the Student

Monitor Study 23

Figure 9: Average Monthly Balances on Student Credit Cards for

Students Who Carry a Balance, Reported in the

TERI/IHEP Study 24

Figure 10: University Policies on Credit Cards 26

Figure 11: Universities’ Financial Education Programs 32

Figure 12: Credit Card Issuers’ Marketing Methods 37

Figure 13: Credit Card Terms for Students and Nonstudents 39

Figure 14: Three Studies on College Students and Credit Cards 49
Page 1 GAO-01-773 College Student Credit Cards

June 20, 2001

The Honorable Louise M. Slaughter

House of Representatives

The Honorable John J. Duncan

House of Representatives

The Honorable Paul E. Kanjorski

House of Representatives

This report responds to your request that we examine several issues

related to college students1

 and credit cards.2 Eighteen year olds can enter

into a financial contract for a credit card in their name—without the

consent or signature of a parent or guardian—in most states. Controversy

and media attention have surrounded these issues in recent years, and

several state legislators and members of the U.S. Congress have

introduced legislation related to college students’ use of credit cards. As

agreed with your offices, our objectives in this report are to describe (1)

the advantages and disadvantages credit card use presents to college

students and available bankruptcy data, (2) the results of key studies

showing how college students acquire and use credit cards and how much

credit card debt they carry, (3) universities’ policies and practices related

to on-campus credit card marketing, and (4) the business strategies and

educational efforts credit card issuers direct at college students.

To address your request, we conducted structured interviews of about 100

officials at 12 universities and colleges around the country, including

student deans, bursars, comptrollers, financial aid officials, student union

 1

By “college students,” we mean those enrolled full time as undergraduates at 4 year

colleges and universities in the United States. There were 5.4 million full-time

undergraduate students at 4-year colleges and universities in the United States in the Spring

of 2000. See Student Monitor, Financial Services, Ridgewood, NJ: 2000.

2

The focus of this study is the “bank card” issued by American Express, Discover, and the

financial institutions that are members of MasterCard and Visa. These cards are generalpurpose credit cards that allow customers to carry an unpaid balance, require a minimum

payment each month, and charge interest on the unpaid amount. Our scope does not

include travel and entertainment cards that do not allow the user to roll over an unpaid

balance from month to month, credit cards that can be used only at a specific store, or

debit cards that deduct the cost of purchases directly from consumer checking accounts.

For a general discussion of credit cards see Thomas A. Durkin, “Credit Cards: Use and

Consumer Attitudes, 1970-2000,” Federal Reserve Bulletin, Sept. 2000; and David Evans and

Richard Schmalensee, Paying With Plastic: The Digital Revolution in Buying and

Borrowing, Cambridge, MA: MIT Press, 1999.

United States General Accounting Office

Washington, DC 20548
Page 2 GAO-01-773 College Student Credit Cards

directors, alumni association officials, credit union officials, and student

government representatives. We selected a variety of universities based

upon their status as public or private institutions, geographic region,

admissions policy, size and composition of the student body, cost of

attendance, and other factors. On campus, we also collected credit card

applications and observed the solicitation of students at tables set up in

student unions. We also interviewed officials from five consumer groups

and five credit card issuers. We analyzed studies on college students and

credit card use as well as documentation from universities, consumer

groups, academics, and federal bank regulators.

Credit card issuer participation in our study was voluntary because we do

not have a legal right of access to any account data or business

information of credit card issuers. We obtained information on business

strategies from six large credit card issuers.3

 Some credit card issuers

were not comfortable discussing certain issues, citing the confidential and

proprietary nature of information such as the criteria the companies use to

evaluate applications. One credit card issuer declined to meet with us or to

answer written questions we submitted. Because we were unable to get

account data from major credit card issuers we were unable to address

some questions you asked, such as whether college students manage their

credit card debt differently than other groups including new credit users

and general credit card users. We are continuing our negotiations with

nine credit card issuers on creating a pooled database of information from

credit card accounts that would allow us to undertake an independent

analysis of college students’ accounts and compare them with the

accounts of other types of credit card users. If these negotiations were to

be successful, we would issue a separate report to you on the results of

that work. Appendix I provides a complete description of our scope and

methodology. Appendix II provides the information you requested about

actions taken or pending in state legislatures since January 1999, regarding

college students and credit cards.

Credit cards were generally perceived as advantageous to college students,

but there was also concern about the risks they presented for this group.

Students, university officials, and representatives of consumer

 3

This report focuses on credit cards that college students have obtained in their own name

and for which they have payment responsibility. Our scope excludes credit cards cosigned

by another individual—typically a parent—who is responsible for making payments if the

student does not.

Results in Brief
Page 3 GAO-01-773 College Student Credit Cards

organizations and credit counseling services agreed that credit cards

offered students many advantages. Credit cards provided convenience and

security and were especially useful in emergencies, allowing students to

pay for unplanned medical expenses or purchase airplane tickets home. In

addition, they allowed students to establish credit histories that can help

in acquiring additional credit in the future. But some university officials

and debt counseling services told us that they believed that college

students were more likely than other types of credit card users to run up

debts they could not pay because of their financial inexperience. This

problem could become particularly severe after graduation, when many

students must begin making payments on education loans (about half of

college graduates leave schools with an average of $19,400 in student

loans). Credit card debt combined with education loan repayments and

other expenses graduates may incur—such as renting an apartment and

buying a car—may create a substantial repayment burden. We were unable

to determine how many college students file for bankruptcy and what, if

any, contribution credit card debt might have been.

The three studies we reviewed showed that the majority of college

students had at least one credit card in their name, and some had credit

card debt. Two of the studies, which were representative of a larger

national college student population, but which relied on self-reporting,

showed that 63 and 64 percent of students had credit cards. Most of these

students (59 and 58 percent) reported paying their balance in full each

month; among the 42 percent who did not pay in full in one study, the

average balance was $577.4

 Much smaller percentages—14 and 16

percent— said they had balances over $1,000, and in one study, 5 percent

reported balances exceeding $3,000. A third study reported actual credit

card balances from credit reports based on a small sample drawn from

students applying for a particular type of student loan and was not

designed to be representative of college students as a whole. The study

reported that 78 percent owned credit cards and carried an average

balance of $2,748. These higher numbers for credit card ownership and

average balances may reflect the different characteristics of the subgroup

applying for this loan and the fact that data from credit reports, and not

self-reports of indebtedness, were used. About one third of the students

said that they acquired credit cards through mail solicitation (36 to 37

percent) and about one quarter from campus displays and solicitation (21

 4

Research suggests that individuals tend to underreport the amounts or levels of certain

information—such as consumer debt—that could reflect poorly on them.
Page 4 GAO-01-773 College Student Credit Cards

to 24 percent). They reported using credit cards for a variety of expenses,

including books, supplies, food, clothing, entertainment, school fees, and

tuition.

Universities’ policies and practices regarding credit cards—and in

particular regarding solicitation—varied not only across universities, but

also within the universities themselves. We found that policies were either

campuswide (all parts of the university were subject to one set of rules) or

allowed individual entities, such as bookstores, student unions, and

alumni associations, to set their own rules. Of the 12 universities and

colleges we visited, 2 state universities had relatively restrictive policies

based on state law; and one private university prohibited credit card

solicitation. Nine institutions had decentralized policies. On these

campuses, for example, a student union might restrict solicitation, while a

bookstore might not. In some cases, complaints from students about

aggressive marketing had led the universities to adopt policies restricting

on-campus marketing. Both university officials and students cited the

personal solicitation of college students on campuses as causing the most

controversy. One official pointed to the “carnival atmosphere” marketers

created and many raised concerns about aggressive sales practices. Card

issuers paid credit card vendors by completed application. Several major

credit card issuers made an effort to address this problem by adopting a

“code of conduct” for contractors that solicit on campuses. All but two of

the universities had made efforts to educate students about handling their

finances, including offering informal “financial education” presentations,

debt counseling, and on-line information. Two universities made

bankruptcy attorneys available to counsel students who were having

financial difficulties. One attorney told us that about one in five students

who used the legal service over the past 3 years sought advice or

information on credit card debt issues. Few of the universities we visited

collected data on why students left college, but most of the universities

cited financial concerns as possible reasons why college students decided

to leave prior to graduation.

As part of their overall business strategy, certain credit card issuers

marketed to college students because they viewed them as good

customers who would continue using the issuers’ credit cards in a

responsible way. These companies used a variety of strategies to solicit

students, including soliciting on campus and the Internet, although many

favored direct mail marketing. Some issuers had arrangements with a

certain part of a university (e.g., an athletic department or alumni

association) that allowed the issuer to offer a credit card bearing the

university logo in return for payments from the issuer. Most of the issuers
Page 5 GAO-01-773 College Student Credit Cards

we talked with customized their risk management or underwriting

standards (or both) for college students and sometimes adjusted the terms

and conditions of the cards. Other companies treated college students like

other first-time cardholders. Card issuers distributed credit information

materials and provided financial support to financial literacy and debt

counseling organizations. Most card issuers provided counseling to help

college students who were having trouble making payments and worked

out payment plans or reduced interest payments. Some issuers referred

students to credit counseling services.

We obtained comments on a draft of this report from representatives of

the credit card issuers, the firms responsible for the studies we analyzed,

the universities we visited and staff of appropriate federal regulatory

agencies. The credit card issuer representatives objected to our

presentation of the views of university officials stating that they were not

necessarily a reflection of the experiences on campuses nationwide. Our

draft had noted that our sample was not intended to be representative of

universities in the United States, but we also noted that we interviewed

about 100 officials at 12 universities in different parts of the country and

with different characteristics of size, cost of attendance, and other factors.

The issuers’ comments and our responses are summarized at the end of

the report. Officials of universities who reviewed the university section of

the draft report agreed with our presentation of their views and the

information they provided. All who reviewed the draft report or sections

pertinent to their organizations made some technical suggestions that we

addressed as appropriate. See pages 41 to 44. We are not making

recommendations in this report.

In this report, the term “university” includes nonacademic entities such as

the university administration, student union, alumni association, athletic

departments, and bookstore. These entities may or may not be

autonomous (see fig. 1). Student unions are the center of college

community life, serving students, faculty, staff, alumni, and guests, and

therefore are often the focus of credit card marketing. Alumni associations

provide a fund-raising link to graduates, offer financial services to alumni

and students, and therefore can be a source of credit card customers. As

taxpayer support for universities has diminished relative to other sources

of income, universities have sought to raise funds by increasing tuition and

Background
Page 6 GAO-01-773 College Student Credit Cards

fees and becoming more market oriented.5 Some universities have sought

increased revenues through contracts with private companies (e.g., sale of

space for advertising at athletic arenas) and increased alumni donations.

Figure 1: Nonacademic Entities of a University

Source: GAO analysis.

The credit card industry is a major provider of financial services and a

multibillion-dollar industry.6

 According to the American Bankers

Association, in the second quarter of 1998 companies that issued Visa and

MasterCard credit cards had 335 million accounts, including 186 million

active accounts with balances totaling $401 billion. The top-10 credit card

issuers held 75 percent of total bank credit card receivables.7

 The

preferred marketing technique for potential customers was direct mail—

with 3.54 billion pieces of mail sent in 1999—but card issuers also used

 5

Universities are generally tax-exempt charities, although some components, such as

bookstores, may be for-profit entities.

6

In mid-1999, revolving bank card credit totaled $585 billion, or 10.4 percent of outstanding

consumer credit. This amount is slightly less than the $782 billion in other installment loans

(13.9 percent of outstanding consumer credit) and much less than the $4.3 trillion in home

mortgages—first and second mortgages plus home equity loans (75.7 percent). See

American Bankers Association, Bank Card Industry Survey Report, Washington, D.C.:

American Bankers Association (1999).

7

The American Bankers Association listed the top-10 issuers—ranked by credit card

receivables—in midyear 1999 as Citigroup, First USA, MBNA, Chase Manhattan, Bank of

America, Providian, Capital One, Household, Fleet, and Wells Fargo.
Page 7 GAO-01-773 College Student Credit Cards

techniques such as “tabling”

8

 on university and college campuses. In

addition, some card issuers pursued “affinity relationships”

9

 with

nonfinancial organizations and institutions, including universities. These

relationships often result in a credit card bearing the business or

institutional logo and payments from the card issuers based on the number

of cards issued, the charges made to the cards, or both.

Some credit card issuers are engaged in the practice of extending credit to

borrowers who are at a higher risk of default than traditional customers.

These issuers are lending to borrowers who are attempting to establish or

expand their credit history. Many college students—mostly those who are

young, are not employed or have limited employment income, and have no

credit history—fall into this category. Bank regulators have noted that

these lending activities can present a greater-than-normal risk for financial

institutions and deposit insurance funds.10 Customers, including college

students, with limited or no credit history and income will be charged a

higher interest rate to compensate for the higher risk of repayment. Banks

issuing credit cards are subject to oversight by federal bank regulators to

ensure compliance with federal laws and regulations.11

Federal Reserve staff told us that credit cards issued to college students

had not been the focus of bank examinations because they tended to

examine the risk of the credit card portfolio as a whole and do not

examine subgroups of card holders—especially at banks where the credit

card portfolio is a minor portion of their financial business. These officials

said that college student credit card portfolios have not been viewed as

especially risky, even at banks whose primary business was issuing credit

cards. Office of the Comptroller of the Currency (OCC) officials told us

 8

Tabling involves card issuers or their representatives who staff a table at a campus

location and market credit cards to students, and it may include incentives to get students

to apply for credit cards.

9

An affinity relationship is a contract between a group and a credit card company that

allows the group and issuer to market a card carrying a specific logo, without the issuers

name, and which offers benefits tailored to the cardholder’s interest. The issuer often pays

the sponsoring organization a fee.

10See Office of the Comptroller of the Currency, OCC Bulletin 99-15, Washington, D.C.:

Apr. 5, 1999.

11The Office of the Comptroller of the Currency, National Credit Union Administration,

Federal Deposit Insurance Corporation, Federal Reserve Board, and Office of Thrift

Supervision are the federal entities that oversee the depository institutions that issue credit

cards.
Page 8 GAO-01-773 College Student Credit Cards

that although they have not focused bank examinations on credit cards

issued to college students, they do monitor and examine an issuer’s

various credit card portfolios—including a review of marketing and

acquisition channels, underwriting, and other risk management functions.

The portfolio segment of college students typically represented a small

portion of the overall portfolio and OCC is not likely to spend additional

time on the college student segment. OCC officials told us that if card

issuer management reports provided to OCC examiners showed that the

college student segment was a significant portion of the credit card

portfolio and was growing rapidly or experiencing performance weakness,

OCC would devote more resources to a review of the college student

segment.

Bank regulators review banks’ compliance with laws relevant to credit

cards, including regulations governing credit card disclosure and

advertising.12 The Truth in Lending Act, among other things, requires card

issuers to disclose key terms and costs in solicitations and applications to

open credit and charge card accounts, when an account is opened, and in

billing statements. Required disclosures include the periodic rate of

interest that will be applied to account balances—expressed as an annual

percentage rate—and an itemization of any other finance charges. Special

requirements also apply to credit advertisements. The Federal Reserve’s

Regulation Z implements the Truth in Lending Act.13

The information we reviewed revealed consistent views of the advantages

and disadvantages associated with using credit cards. For those students

who manage their credit responsibly, credit cards provide access to credit

and payment conveniences. For those college students who do not manage

credit responsibly and have trouble repaying debt, the disadvantages of

credit cards can outweigh the advantages, and their credit card debt may

be costly and difficult to repay. Card issuers have used lower credit limits

and other techniques on a per card basis to constrain the amount of debt

that college students can accumulate.

 12Other federal laws and regulations relevant to credit cards are the Equal Credit

Opportunity Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, and the Fair

Debt Collections Practices Act.

13See 15 U.S.C. 1601 et seq. and 12 CFR 226.1.

Credit Cards Have

Both Advantages and

Disadvantages for

College Students
Page 9 GAO-01-773 College Student Credit Cards

The information we reviewed indicated that college students want their

own credit cards, both for convenience and to establish a credit history.14

The conveniences that credit cards offer students include the following:

• “Cashless” transactions,

• An interest-free loan from the time of purchase until the payment is due,

• Cash advances from automated teller machines,

• The ability to shop by telephone and on-line and make hotel reservations,

• The chance to purchase items that students might not have the cash to

purchase, and

• An instant source of credit that is available without filling out forms or

undergoing credit checks.

Several individuals we interviewed noted that credit cards provide some

financial security for students. Unlike cash, a lost or stolen credit card can

be replaced; and there are liability limits for fraudulent or unauthorized

charges. Credit cards also offer resources in case of emergencies, such as

a large car repair bill or airfare home during a family crisis. Some parents

approve of their college students having credit cards because they see

them as a tool for learning financial responsibility. Some student group

representatives and representatives of credit card issuers cited free gifts or

bonuses associated with obtaining a card and continued credit card use as

advantages to card ownership. Finally, some issuers pointed out that

monthly statements can serve as a financial record for students and their

families. Gifts or awards associated with credit cards marketed to college

students include cash rebates, magazine subscriptions, coupons reducing

the price of airplane tickets, discounts or free telephone calls, points

toward consumer products, and rebates for a car.

For some students, the disadvantages of having a credit card may

outweigh the advantages. Some consumer group representatives, debt

counselors, and university officials told us that students may not

understand the consequences of incurring excessive debt and making

payments late. The convenience of credit cards may tempt students to live

beyond their means. Consumer and credit counseling groups pointed out

that excessive credit card debt and late payments can impair a

cardholder’s credit rating and make it more difficult and costly to obtain

 14Credit files contain personal information such as date of birth and employment

information; credit history information, including loans, credit limits, amount owed and

late payments; public records, including court judgments, tax liens, and bankruptcy; and a

record of inquiries of who has requested a copy of the report.
Page 10 GAO-01-773 College Student Credit Cards

credit in the future. Credit card issuers emphasize this same point in

information they make available to students. Many of these sources also

noted that students who pay only the minimum balance each month may

not understand the cumulative effect of interest rates. For example, a

college student with a credit card loan of $2,000 and an interest rate of 19

percent who pays back the loan at $40 per month will incur interest

charges of $1,994 by the time the loan is paid in full.15 At this rate, it would

take 100 months, or over 8 years, to pay back the loan (table 1).

Table 1: Minimum Repayment Schedule on a $2,000 Credit Card Loan at 19 Percent

Monthly minimum

payment amount

Number of

 months to pay

Total interest

payment

$ 40 $100 $1,994

 50 64 1,193

 75 35 619

 100 25 424

Source: Credit Card Minimum Payment Interest Calculator, Daniel C. Peterson, www.webwinder.com.

Bankruptcy reform legislation that is currently pending before Congress

would require such an example to be included in credit billing statements,

but at this time no such disclosure is required. There was also general

agreement that students may find credit card debt and other debts harder

to repay upon graduation than they had anticipated. Parents of college

students may or may not have the financial resources to help these

students reduce or eliminate credit card and other debt. Some parents may

have the resources to help but choose not to provide financial assistance

with debt because they want their college student to learn a difficult

lesson about financial responsibility. According to the College Board, the

average undergraduate with student loans graduated owing $19,400 in

1998 to 1999. College officials and debt counselors also told us that

students may overestimate their starting salaries and underestimate their

living costs after graduation.16 According to a 1998 study of college

 15Minimum payments are typically 2 percent of the outstanding balance or $10, whichever

is higher.

16Starting salaries ranged from about $23,300 for psychology majors to about $42,800 for

chemical engineering majors. See The Education Resources Institute and the Institute for

Higher Education Policy, Now What? Life After College for Recent Graduates, Boston,

August 1997. This study reports that the fastest-growing components of composite debt of

recent college graduates are student loans and credit cards.
Page 11 GAO-01-773 College Student Credit Cards

students and credit cards, the potential accumulation of high interest

payments on large amounts of credit card debt increases when

• four or more credit cards are owned,

• average credit card balances are greater than $1,000,

• balances are carried over each month, and

• tuition and fees are charged.17

At the extreme, excessive credit card debt combined with other financial

problems18 can lead to personal bankruptcy, according to one credit

counseling organization.19

We were unable to determine the number of college students filing for

bankruptcy. U.S. Department of Education officials told us that they did

not track the number of college students filing for bankruptcy nor did they

know of any other organization or study that reported this information.

Officials of the Administrative Office of the U.S. Courts and the Executive

Office for U.S. Trustees, which have responsibilities regarding

bankruptcies, told us that their officials do not collect data on

occupational status, including whether someone is attending college. They

also told us that although those filing for bankruptcy are asked to report

their age and that age information, along with much other information

reported by bankruptcy applicants, is not systematically analyzed.

American Bankruptcy Institute officials told us that they did not know of

studies that tracked the college attendance or age of individuals filing for

bankruptcy. We did identify some unpublished academic research that

included data on age but not student status. The researchers collected

demographic data, including age, from bankruptcy applicants in 1999 and

 17See The Education Resources Institute and The Institute for Higher Education Policy,

Credit Risk or Credit Worthy? College Students and Credit Cards, Boston, MA, June 1998.

18U.S. Department of Education officials told us that they did not collect debt composition

information—e.g., debt arising from credit card use, automobile loans, and other sources of

financial obligation—for college students beyond debt arising from student loans. The

Federal Reserve’s Survey of Consumer Finance does not separate out college students

within the households from whom it surveys financial activities.

19The two bankruptcy bills passed by the 107th Congress—S. 420 and H.R. 333—require the

Board of Governors of the Federal Reserve System to study the impact on bankruptcy of

extending credit to dependents (defined essentially as high school seniors and college

students).
Page 12 GAO-01-773 College Student Credit Cards

during previous years.20 Based on their data collection effort using a

questionnaire completed by 1,974 individual debtors filing for bankruptcy

during the first quarter of 1999 in eight federal judicial districts around the

country, the proportion of debtors in bankruptcy for selected age groups

during 1999 are displayed in figure 2. Fewer Americans under 25 filed for

bankruptcy in 1999 than those between ages 25 and 34 but more filed for

bankruptcy than those age 65 and older. The growth rate of bankruptcy

filings for people under 25 was greater than the growth rate for ages

between 25 and 34 but less than that for people in age ranges 35 and older

(see fig. 3). This data does not indicate how many individuals under 25

were college students nor does it indicate what, if any, contribution credit

card debt made to these bankruptcy filings. Nonbusiness bankruptcy

filings have declined somewhat in the last two years from about 1.4 million

in 1998, to about 1.3 million in 1999, to about 1.2 million in 2000 according

to the American Bankruptcy Institute.

 20See Melissa Jacoby, Teresa A. Sullivan, and Elizabeth Warren, “Rethinking the Debates

Over Health Care Financing: Evidence From The Bankruptcy Courts,” 75 New York

University Law Review, May 2001. See also Teresa Sullivan, Elizabeth Warren and Jay

Westbrook, The Fragile Middle Class: Americans in Debt, Yale University Press, 2000.
Page 13 GAO-01-773 College Student Credit Cards

Figure 2: Proportion of Debtors Filing For Bankruptcy by Age Group

Source: Consumer Bankruptcy Projects II and III, 1991 and 1999.
Page 14 GAO-01-773 College Student Credit Cards

Figure 3: Percent Growth in Bankruptcy Filings By Age of Petitioner—1991 to 1999

Source: Consumer Bankruptcy Projects II and III, 1991 and 1999.
Page 15 GAO-01-773 College Student Credit Cards

We identified three studies that provided some data on how college

students acquire and use credit cards and pay credit card debt. Two of the

studies—a survey sponsored jointly by The Education Resources

Institution and Institute for Higher Education Policy (TERI/IHEP),21 and a

survey by the firm Student Monitor22—used similar methodologies and

generated similar findings. The third study was conducted by Nellie Mae, a

Sallie Mae subsidiary that provides loans for higher education. This study

covered only a small group of students applying for a particular type of

loan, and its findings differed from those of the other reports, which

covered a broader and more typical population of college students. The

Nellie Mae study showed more students owning credit cards and a higher

average level of credit card debt. All three studies had generally sound

methodologies but with some limitations: the TERI/IHEP and Student

Monitor studies relied on self-reporting and were subject to nonresponse

from sampled students, and the Nellie Mae study covered only a small pool

of students who were trying to get a particular type of loan.

The TERI/IHEP and Student Monitor surveys drew statistically valid

samples that were representative of a broad college student population in

the United States. The TERI/IHEP study, published in June 1998, was a

telephone survey of a random sample of 750 college students drawn from a

commercially available list.23 The Student Monitor study conducted in

spring 2000, was based on in-person interviews with 1,200 randomly

selected college students from 100 universities around the country. The

schools were selected to provide a representative sampling based on

 21TERI is a national not-for-profit organization that guarantees student loans and performs

education policy and research activities. IHEP is a not-for-profit organization that fosters

access to and quality in post-secondary education through research and policy analyses,

among other efforts. The TERI/IHEP study was conducted in part to understand the debt

levels graduating students have accumulated—especially the level of credit card debt in

relation to student loan debt.

22Student Monitor is a firm that surveys college students on issues such as lifestyles and the

media, automotive, computers and the Internet, and financial services and

telecommunications. Companies (including credit card companies) can subscribe to the

surveys and use this information to market specific products to college students.

23Fifty-nine percent of the respondents attended 4 year institutions, 29 percent were

enrolled in 2 year institutions or trade schools, and 11 percent attended graduate or

professional schools. Seventy-eight percent of survey respondents were younger than age

24. The TERI/IHEP results that we report differ from the results of the TERI/IHEP study

itself, because, where possible, we excluded part-time students. Part-time students may be

older than 21 years of age or working full time.

Studies Provide

Limited Information

on College Students

and Credit Cards

The TERI/IHEP and

Student Monitor Studies

Had Similar Methodologies

and Limitations
Page 16 GAO-01-773 College Student Credit Cards

location, type of higher education institution (public or private), and

enrollment. Figure 4 compares results of the two studies in key areas.

Figure 4: Comparison of TERI/IHEP Study and Student Monitor Study Results on

College Student Credit Card Acquisition and Payment

Source: TERI/IHEP and Student Monitor studies.

These two studies had an important limitation: they were based on

information reported by the students themselves and were not designed to

verify that information. Some researchers maintain that respondents

sometimes underreport the quantity or level of characteristics that could

be considered unflattering. Despite this and other limitations (such as a

reliance on memory and nonresponse of part of the sample), these two

studies provide the best data currently available for a broad population of

college students. Appendix I contains more information about the

methodology and findings of the studies, and appendix III describes other
Page 17 GAO-01-773 College Student Credit Cards

studies we identified on college students and credit cards but which are

not discussed in the body of the report because of more pronounced

methodological limitations.

The TERI/IHEP and Student Monitor studies found that nearly two-thirds

of all college students had at least one credit card in their name (fig. 5).

Between 6 and 13 percent of college students had four or more credit

cards. According to the Student Monitor study, more than half of the

students reported credit limits of $1,001 to $5,000, and the TERI/IHEP

study reported that 24 percent of students had total combined credit limits

of more than $5,000 (fig. 6). Figure 6 depicts higher credit limits for the

majority of students surveyed in the TERI/IHEP study (a combined total of

51 percent reporting credit limits of $2,001 or more compared with 30

percent of students surveyed by Student Monitor). The difference may be

explained by the difference in the samples used in each study. The

TERI/IHEP sample of students included 11 percent who were graduate or

professional school students. Because these students are likely to be older,

they may have the resources to qualify for higher credit limits. The

TERI/IHEP study also included 29 percent who were at 2-year schools.

More of those students may have been working full time and have had the

resources to qualify for higher credit limits.

Most College Students Had

Credit Cards and Most Had

Combined Credit Limits of

Less Than $3,000
Page 18 GAO-01-773 College Student Credit Cards

Figure 5: Number of Credit Cards in Students’ Name

Source: TERI/IHEP and Student Monitor studies.
Page 19 GAO-01-773 College Student Credit Cards

Figure 6: Credit Limits on College Students’ Cards

Source: TERI/IHEP and Student Monitor studies.

Survey results indicated that college students got their credit cards from a

variety of sources. According to the Student Monitor study, 36 percent of

students obtained their cards by responding to mail offers, 15 percent by

filling out an application from a display on campus, and 14 percent by

applying at a bank. Smaller percentages came from tabling and off-campus

displays (6 percent each); telephone solicitation (4 percent); and 800

telephone numbers, internet advertising, and applications placed in a

college bookstore bag or college publication (8 percent combined). The

TERI/IHEP study reported that 37 percent of college students got their

first credit card through a mailing, 36 percent through an application at a

business, 24 percent from an on-campus representative or advertisement,

and 3 percent from other sources. This study also reported that 63 percent

of the students obtained their first credit card by applying on their own.

Another 18 percent reported that their first credit card was obtained from

Mail Solicitation

Accounted for More Than

One-Third of College

Students’ Credit Cards
Page 20 GAO-01-773 College Student Credit Cards

their parents; 14 percent said it was sent in the mail, and 4 percent

received a first card by other methods.

Many of the students responding to both the Student Monitor and the

TERI/IHEP surveys had credit cards as freshmen. Almost half of those

responding reported getting a bank credit card during their freshman year,

but a sizable minority said they already had credit cards when they

entered college. According to the Student Monitor Study, 46 percent of

college students obtained credit cards during their freshman year, 20

percent after high school but before college, and 14 percent in high school.

Fourteen percent acquired a credit card during their sophomore year of

college and 5 percent after their sophomore year of college. Among the

students surveyed by TERI/IHEP, 55 percent reported receiving credit

cards in their first year of college. Another 25 percent said they got their

first credit card in high school, while 10 percent received theirs as

sophomores and 10 percent after the sophomore year.

The two surveys showed that college students used their credit cards for a

broad range of items. Students responding to the TERI/IHEP study said

that the most common items for which they used credit cards were routine

personal expenses such as food, clothing, and entertainment (77 percent);

occasional and emergency expenses (67 percent); and books and school

supplies (57 percent). Only 12 percent used credit cards to pay tuition and

fees24, and just 7 percent used them for room and board. Of the students

who did charge their tuition and fees, over half (57 percent) paid the

charges in full right away. Of survey respondents with credit cards, 44

percent said that credit cards were used for living expenses, 24 percent

said they were used for large occasional purchases or health care, and 22

percent said they were used for education related expenses such as

tuition, fees, books, and supplies. Student Monitor asked students how

they typically paid for certain goods and services. Of students who

purchased airline tickets, 61 percent of the students surveyed reported

paying for airline tickets with credit cards. Thirty-three percent said they

used credit cards to pay for car repairs, and 21 percent said they paid

tuition with credit cards. College students charged an average of $127 a

month in 2000 according to Student Monitor.

 24This question was asked of those students who reported that their schools allowed credit

card payment of tuition and fees or who did not know their school’s policy.

College Students Used

Credit Cards to Pay for a

Variety of Items
Page 21 GAO-01-773 College Student Credit Cards

Four credit card issuers provided us with data that showed the items

college students charge most frequently (fig. 7).25 Their data show that the

top categories of spending for the most recent 12-month period available

were gasoline and other service station goods and services; mail order,

telephone, and Internet charges; and food, clothing, and other retail

expenses. Two card issuers noted that the spending patterns of their

college student customers were similar to nonstudents of a similar age or

their general customers, but two other issuers reported that “education” as

a spending category was the fourth most frequent spending category. One

card issuer noted that data on the types of charges came from the stores

where the items were bought and the charges were often not broken down

into specific items. For example, department store charges could

represent clothing, cosmetics, or household items, while university

bookstore charges could include books, clothing, or athletic supplies.

 25Two issuers declined to provide the data—one issuer said they did not have aggregate

transaction available and another said the data was available but not pulled on an on-going

basis for the student market. Card issuers used different categories, and some companies

provided more detail than others. This information reported by the card issuers is not

comparable with the data from the two studies.
Page 22 GAO-01-773 College Student Credit Cards

Figure 7: Categories of College Student Credit Card Charges

Note: Categories at top of figure are more frequently charged than categories at bottom of figure.

Source: Responses of four credit card issuers to GAO request for data.

Most of the students who responded to the two surveys said that they paid

their own monthly credit card bills and that they paid their balance in full

each month. Eighty-six percent of the students interviewed for the

TERI/IHEP study said they paid their own bills. Eighty-three percent of

students with a card in their own name reported paying their own credit

card bill, according to Student Monitor. Fifty-nine and 58 percent of the

students surveyed in the studies reported that they paid their monthly bill

in full. Eighty-two percent of the respondents who carried a balance said

they typically paid more than the minimum amount due according to the

TERI/IHEP study. According to the Student Monitor study, the reported

average monthly balance of the 42 percent who carried debt was $577, and

16 percent of those carrying a balance from month to month were running

a balance of more than $1,000 (fig. 8). The TERI/IHEP study did not report

an average monthly balance but did report balances according to dollar

ranges (fig. 9).

Most Students Did Not

Carry a Credit Card

Balance
Page 23 GAO-01-773 College Student Credit Cards

Figure 8: Average Monthly Balances on Student Credit Cards for Students Who

Carry a Balance, Reported in the Student Monitor Study

Source: Student Monitor.
Page 24 GAO-01-773 College Student Credit Cards

Figure 9: Average Monthly Balances on Student Credit Cards for Students Who

Carry a Balance, Reported in the TERI/IHEP Study

Source: TERI/IHEP study.

The Nellie Mae study, published in December 2000, differs from the other

two studies in its scope, methodology, and findings.26 The study covers

only a subset of college students who applied for a particular loan product

and was not projectable to a national college student population. Nellie

Mae drew a random sample of 256 undergraduates from its nationwide

group of 1,065 students who applied for private loans for educational

expenses early in 2000. These students either did not qualify for federal

student loans or had already received the maximum amount available to

them. The methodology is unique among the three reports (i.e., the study

relies on information from credit bureaus and not on information provided

by the students themselves). Credit bureaus receive information for

 26Nellie Mae, “Credit Card Usage Continues Among College Students,” Braintree, MA, Dec.

2000.

The Nellie Mae Study

Differed From the

TERI/IHEP and Student

Monitor Studies
Page 25 GAO-01-773 College Student Credit Cards

customers, including credit card issuers, banks, and other entities that

extend credit.27

The Nellie Mae study reported that 78 percent of students in the sample

had credit cards; the average number was three cards per student. The

percentage of college students with four or more cards (32 percent) was

higher than in the TERI/IHEP survey. In general, the Nellie Mae study

reported higher levels of debt than the TERI/IHEP and Student Monitor

studies. Nellie Mae reported an average credit card debt for those with a

balance of $2,748. Thirteen percent of the students in its sample carried

credit card balances of $3,000 to $7,000, and 9 percent had balances of

more than $7,000. There are two possible reasons for the differences in the

average level of credit card debt reported in the TERI/IHEP and Student

Monitor studies, and the Nellie Mae study. First, students in the first two

studies could have underreported their credit card debt. Second, because

the students in the Nellie Mae study were drawn from a small pool of loan

applicants, they were not representative of the college student population

as a whole.

The universities we visited took different approaches to on-campus

solicitation by credit card issuers.28 Some universities had campuswide

policies that affected all organizational components, while others allowed

nonacademic entities—student unions, bookstores, athletic departments,

and alumni associations, for instance—to set their own policies. Only 1 of

the 12 universities we visited prohibited credit card solicitation altogether,

and just 2 others (both state universities) had relatively strict prohibitions,

based in part on state laws.29 At these two universities, commercial

 27This study did not screen out co-signed cards but did screen out students who were only

authorized users of credit cards—e.g., credit cards in the name of the parent and given to

the college student to use.

28None of the universities we visited had student identification cards that could be used as

credit cards. Nine of the 12 universities, however, had identification cards with a debit

feature that allowed students to make some on-campus purchases and, in a few cases,

limited-off campus purchases.

29These laws prohibit commercial solicitation and transactions and displays of property or

services for sale on a campus, except with the written permission of the campus president.

Permission is granted if the proposed activity (1) aids in the achievement of the

educational objectives of the campus, (2) does not unreasonably interfere with the

operation of the campus, and (3) is not prohibited by law. This test must be applied equally

to all vendors and not selectively to certain types of vendors, such as credit card

companies.

Universities’ Policies

on Credit Cards

Differ, But Most

Focus on Solicitation
Page 26 GAO-01-773 College Student Credit Cards

vendors were either prohibited from soliciting on campus or allowed to

distribute but not collect credit card applications. The remaining nine

universities allowed each university entity to set its own policies. At most

of the universities we visited, tabling at student unions and aggressive

marketing by vendors hired by credit card issuers created the most

controversy. Most of the bookstores we visited were run by national

corporations or operated independently of the university and tended to

adhere to their own policies. While only a few of the athletic departments

were involved in credit card solicitation, alumni associations often

established relationships with credit card issuers to raise funds. Partly in

response to criticism of university involvement with credit card

solicitations, most of the universities we visited offered nonacademic

instruction in personal finance. Figure 10 shows credit card marketing

efforts and other characteristics of the universities visited. In addition,

some credit card companies made changes in how they provide disclosure

information and some adopted standards for campus solicitation.

Figure 10: University Policies on Credit Cards

Note: A checkmark indicates that the activity takes place.

a

Undergraduate enrollment numbers are rounded to the nearest thousand.

b

Although credit card vending is allowed, the university prohibits vendors from taking completed credit

card applications from students on-campus. Completed applications from students on-campus must

be mailed to the credit card companies.

c

Only students are permitted to staff the tables at the student union.

d

Alumni affinity relationship is in conjunction with the university’s athletic affinity card.

Source: GAO interviews with university officials and Web site data.
Page 27 GAO-01-773 College Student Credit Cards

Complaints about the marketing practices of credit card vendors at

student unions have influenced universities’ policies on solicitation.

Student union administrators from some universities we visited cited

marketing incentives (in the form of free gifts) as the most frequent source

of complaints.30 These concerns led three universities to prohibit the use of

such incentives with credit card applications. One student union

administrator complained that the vendors created a “carnival

atmosphere” with loud music and games, noting that “the incentives, along

with the party atmosphere, masked the responsibilities of owning a credit

card,” especially since there was no discussion of the consequences of

misusing a credit card. Two officials from a state student association

feared that using incentives could lead to potential abuses. One stated that

credit card vendors pressured students to sign up for free gifts and that the

students would then reveal personal information for gifts, such as a

squeeze ball.

Instances of aggressive solicitation and the presence of many credit card

solicitors in student unions also generated controversy at some

universities, leading to more restrictive solicitation policies. Credit card

companies pay the vendors according to the number of completed

applications secured from students. The vendors we contacted declined to

provide us information about how much they are paid for completed

applications. Officials at several universities said students had a variety of

complaints. For instance, students complained that vendors created a

“hawking atmosphere,” were “out of control,” and were often “in [our]

face.” An official said that some college students complained that vendors

followed them after they had refused the credit card application. Some of

the universities we visited had tailored their solicitation policies to

address these concerns, and some had imposed stricter limits. At one

university, students voted to ban credit card vending in the student union

altogether. Other universities restricted tabling to specific days or

increased the fees for vending. One university limited tabling to three

times per week and required that the tables be staffed only by students,

effectively ending credit card solicitation at the student union. One credit

card vendor told us that they reimbursed student groups based either on

an hourly rate, a flat fee, or a fee based on the number of completed

applications. A different credit card vendor told us that they pay student

 30The gifts included inexpensive items, such as t-shirts, compact discs, water bottles, and

squeeze balls.

Complaints About

Aggressive Marketing at

Student Unions Have Led

to New Policies
Page 28 GAO-01-773 College Student Credit Cards

groups between $25 and $200 a day to table credit cards as well as $1 to $5

for each completed application.

Complaints that credit card marketing efforts were not adequate or helpful

in teaching responsible credit card use also affected solicitation policies at

some universities. As noted previously, federal law requires written

disclosure of key terms when credit is applied for and extended. Officials

and students at several of the universities we visited complained that

when soliciting credit card on campus, credit card vendors did not discuss

or bring to the attention of students key credit card terms such as

available interest rates or penalties that are in written disclosure

documents. They also said credit card vendors did not provide information

on the consequences of nonpayment. For example, an official of a state

student association said students are not told about possible

consequences, such as the impacts of a bad credit record. In response to

such complaints, two universities among those we visited began requiring

credit card vendors to hand out additional credit education information

along with credit card applications and three began offering debt

education presentations. These universities had both centralized and

decentralized policies regarding solicitation.

Some policies responded to the ideological views and financial needs of

student groups. A student union official at one university told us that the

student culture was against commercialism and critical of corporate

sponsorships. The university’s three student unions had taken this

viewpoint into account in banning commercial solicitation, including

credit card solicitation. But other universities chose to consider the

financial needs of student groups in formulating their solicitation policies.

For example, student unions at five universities allowed student groups

that relied on funding from credit cards to sponsor credit card vendors;

these were the only vendors allowed to solicit. At one of the universities

we visited credit card vendors paid $4,359 to five Greek organizations, and

one other student organization, over the course of 3 academic years with

one Greek organization receiving $2,370 in payments for credit card

solicitation.

Some credit card issuers noted that they had responded to concerns about

aggressive marketing in two ways: by supplementing disclosure

information and by creating a code of conduct for on-campus marketers.

Issuers told us that they provide disclosure information to college students
Page 29 GAO-01-773 College Student Credit Cards

both when soliciting and when credit is extended.31 They include

disclosure information on the application or in a separate handout

applicants can keep for reference. Several issuers told us that they have

the same disclosure guidelines for students and nonstudents.

Several card-issuing financial institutions, as well as MasterCard and Visa,

developed the code of conduct for on-campus credit card solicitation in

2000 (appendix IV). The code, which applies to tabling companies and

their representatives (vendors), aims to promote both responsible

marketing practices on college campuses and responsible credit card use

by students. An official with MasterCard International told us that as of

March 2001, six of the largest credit card issuers had adopted the code of

conduct. Two tabling companies specializing in college marketing told us

that they also adhere to the code of conduct. The tabling companies also

had procedures in place for responding to complaints about their

representatives, including referring complaints directly to the issuer and

retraining or terminating vendors. One tabling official said that the

majority of credit card issuers they work with used quality control checks

that included inspecting booths and applications and surveying applicants

by telephone.

Nine of the university bookstores we visited either operated independently

of the university or were managed by national corporations. Seven of

these bookstores did not receive operating funds from the university and

eight had developed their own solicitation policies. Some bookstore

managers told us they must find sources of revenue to help cover costs.

Several bookstores allowed tabling and other forms of solicitation,

including countertop brochures and applications in textbooks and

shopping bags. The stores were rewarded for each credit card application

they submitted to the issuer or received credit against advertising costs.

Applications inserted in shopping bags often helped reduce the cost of the

bags. One corporation developed their solicitation policies with input from

store managers and school officials.

Bookstore officials told us that that tabling was a more limited activity

than other forms of solicitation, including placing applications in shopping

 31State laws and Regulation Z of the Federal Truth in Lending Act require lenders provide

customers with information on the terms of the credit, including the interest rate and

minimum monthly payment. Lenders must disclose the terms during solicitation and after

an application has been accepted.

Most Bookstores Are

Privately Managed and

Have Their Own

Solicitation Policies
Page 30 GAO-01-773 College Student Credit Cards

bags or displaying countertop brochures. Some bookstores had exclusive

arrangements with one credit card company that was allowed to table on

certain days. One bookstore (owned by the university but independently

operated) required credit card vendors to provide consumer education

information during tabling events. Another adhered to a university policy

banning free gifts as incentives for applying for a credit card.

Athletic directors at several of the universities we visited told us that

athletic departments engaged in fund-raising activities to help support

athletic scholarships and programs. But only two athletic departments had

credit card relationships. Some athletic departments engaged in more

extensive fund-raising activities than others, particularly some

departments at universities classified as Division I in the National

Collegiate Athletic Association. These departments in some cases had

separate arrangements with corporate sponsors and credit card banks and

allowed spot announcements, signage, and credit card tabling at sporting

events. In contrast, one athletic department at a Division III university we

visited was relatively small and did not rely on credit cards or private

sources for funding. Some athletic departments had contracts with issuers

that allowed tabling, and two Division I universities had affinity

relationships with credit card issuers. One official at a Division I university

that had an affinity relationship said that the revenue the cards generated

was only a small part of the department’s overall budget and went directly

into its general fund.

Alumni associations at most of the universities we visited sought

additional revenue sources through relationships with credit card issuers.

Eleven of the 12 associations we spoke with had affinity relationships with

credit card issuers that generated substantial income. Alumni association

officials told us that credit card issuers offered a flat fee or a lump sum

plus royalties for completed credit card applications from association

members or a percentage of the total charges made on affinity credit

cards. Officials further told us that the income the associations received

from the credit card issuers provided significant support for both the

associations’ programs and the universities. Income from the affinity

agreements was used to cover such things as the associations’ budgets,

university operating costs, scholarships and mentoring, and long-term

projects, such as the construction of new buildings. According to alumni

association officials, their contracts with the credit card issuers precluded

disclosure of the terms and condition of the agreement including

information on payments made to the alumni association.

Athletic Departments May

Have Credit Card

Relationships

Alumni Associations Often

Had Relationships With

Credit Card Issuers
Page 31 GAO-01-773 College Student Credit Cards

In general the alumni associations determined how the companies could

market the cards. Most of the associations permitted credit card issuers to

solicit members through mailings and telephone calls. Still others allowed

solicitation in the form of tabling at sporting events, alumni gatherings and

other special occasions, or at the student union. While tabling was

permitted under some agreements, several alumni association officials

mentioned that credit card issuers were no longer tabling.

The associations also decided which members could be the focus of

marketing. Generally this group included the alumni themselves and

sometimes student members of the associations. For example, officials

from four of the seven alumni associations with student members told us

that their associations did not permit soliciting of students. The other two

alumni associations permitted solicitation of student members, either by

mail or by mail and telephone. Several of the alumni associations told us

that they had the right to approve the marketing language used in

marketing materials. According to alumni officials, few students held

affinity credit cards. Officials from five alumni associations told us that

students were a small percentage of their alumni affinity cardholders (1 to

10 percent of the total credit card holders).

Some universities had responded to the increase in student credit card use

and on-campus solicitation by offering students financial education and

counseling. Ten of the 12 universities we visited provided some form of

financial education instruction, and some had credit counseling services

or referred students to outside services (fig. 11).

Universities Also Offered

Financial Education and

Credit Counseling
Page 32 GAO-01-773 College Student Credit Cards

Figure 11: Universities’ Financial Education Programs

a

Includes financial presentations provided by on-campus credit unions.

Source: GAO interviews with university officials.

Financial education instruction was often part of freshmen orientation

programs. The head of the collections department at one university, for

instance, told us that the orientation program included a discussion on

budgeting and the responsible use of credit cards. She explained that the

university saw its efforts to balance credit card tabling with debt

education as a way to help keep students out of debt. Another university

covered credit card use in its summer orientation for the same reason.

Two universities, both with decentralized policies regarding solicitation of

students, had bankruptcy attorneys available to offer advice or

information to students on their credit rights, and one had a presentation

at the beginning of each academic year, provided students information on

credit card use and the potential for financial trouble. All of the

universities we visited that provided financial education instruction had

voluntary programs, but some officials felt that this instruction should be

mandatory given that many parents had not taught their children how to

manage money.
Page 33 GAO-01-773 College Student Credit Cards

We asked officials at the three universities that provided advice or

information from bankruptcy attorneys or credit counseling services if

they had any statistics on the extent to which students using these services

had problems with credit card debt and how many had filed for

bankruptcy. While all three universities did not have data on these issues a

bankruptcy attorney representing one of the universities did. At one

university with an undergraduate enrollment of about 10,000, the student

association retained an attorney to provide general and financial advice to

students. The attorney, who specialized in bankruptcy issues, stated that

credit card debt was a primary concern of students seeking his advice.

According to the attorney, over the 3 years since April 1998, approximately

1,328 students had utilized the legal service and of this number, 255

students had sought advice on credit card debt issues. The credit card debt

of these students ranged from about $2,100 to nearly $39,000, with an

average of approximately $11,200. The attorney told us that the younger

college students tended to have less debt than the college students who

are older than age 23. He said that about half the college students he sees

are over age 23 and that the individuals with 6 or 7 credit cards and the

highest levels of credit card debt come from this subgroup. The attorney

stated that in some cases, after paying tuition, students had used any

excess financial aid to pay their credit card debt. Further, during the last 3

years, 83 students using the legal service had filed for bankruptcy.

We asked officials at the 12 universities we visited whether or not they

collected information on why students leave their universities prior to

graduation, the extent to which this information identified whether credit

card debt was an explanatory factor, and the opinions of university

officials on whether credit card debt was a factor in college withdrawal.

Officials at five of 12 universities we visited collected information on

student withdrawals but they did not specifically ask the students to

report whether credit card debt was a factor in their decision to leave.

Officials from three of these universities told us that credit card debt was

not generally cited by students as a reason for their decision to withdraw.

Even so, officials from four universities, including two of the universities

that did and two that did not collect student withdrawal information, told

us that they thought students would not report credit card debt as a reason

for deciding to withdraw unless the university specifically asked.

Nevertheless, 7 of the 12 universities we contacted cited financial

concerns, including credit card debt, as possible reasons why students

decided to leave. Officials from 4 of the 12 universities stated that they did

not sense that credit card debt was a major factor in a student’s decision

to withdraw. Officials from 9 of the 12 universities offered a variety of

Credit Card Debt As A

Reason For Leaving

College
Page 34 GAO-01-773 College Student Credit Cards

other reasons why students decide to withdraw. Among these reasons

were the need to work more hours, family medical problems or health,

homesickness, cultural concerns, academic difficulties, career changes,

marriage, divorce, and pregnancy. Our review of academic research

related to students leaving college indicated that financial factors are some

of the many factors that college students and researchers cite as reasons

for leaving college prior to graduation. We did not find evidence that the

research examined the extent to which credit card debt was a contributory

factor to students leaving college. One researcher said that financial

considerations appear to be but one part of a complex decisionmaking

process, one that depends in large measure upon the nature of the

student’s social and intellectual experiences within the college—especially

the daily interactions between students and faculty both inside and

outside the classroom.32

We surveyed 10 credit card issuers, 6 of which responded, and talked with

industry officials. In our survey and discussions with credit card issuers,

we found that issuers had a variety of business practices directed toward

college students. Some issuers wanted to market to college students

because most college students have some income and lower living

expenses compared to non-students. College graduates were also

attractive because they had higher earning potential than nonstudents, and

students continue to use their cards after college. Issuers told us that they

had several methods of marketing to college students, including direct

mail, the Internet, and on-campus displays. Most of the issuers that

marketed to students said they customized their underwriting standards

for college students. For example, one issuer told us that the college a

student attended was more important than whether or not the student was

employed. Interest rates on the credit cards offered to college students

were tied to the prime rate, students’ credit ratings, or other factors.33 Half

of the issuers we contacted said that they charged college students the

same late fees as other customers. They said credit limits were smaller

overall and were adjusted according to factors such as year in college and

whether or not the student had a checking or savings account at the card

 32See Vincent Tinto, Leaving College: Rethinking the Causes and Cures of Student

Attrition, University of Chicago Press, 1993.

33The prime rate is the base rate that banks use to price commercial loans with short

maturities for the most creditworthy customers.

Card Issuers

Customize Business

Strategies for College

Students
Page 35 GAO-01-773 College Student Credit Cards

issuer’s bank. Card issuers also said they tried to help students who were

delinquent in their payments by providing counseling or referrals to credit

counseling services. They also told us they developed credit information

materials and supported financial literacy and debt counseling

organizations. Appendix V lists the questions we asked the issuers.

Card issuers market to college students because most have some income.

According to the Student Monitor study, 55 percent of students said they

worked part time, and 9 percent said they worked full time, in 2000. The

students reported their mean annual earnings at around $4,550. For the

approximately 58 percent of college students who said they received

money from home each month to help meet their expenses, the average

amount received from home was about $300. Students reported that they

had an average of $195 available for discretionary purchases each month.34

Bachelor’s degree recipients earn 75 percent more on average than those

with only high school diplomas and over a lifetime the gap in earning

potential between a high school diploma and a Bachelor’s degree or higher

exceeds $1 million, according to the College Board.35 Two issuers told us

that they marketed to students because of the long-term profitability of the

college student market. One of these issuers noted that credit cards issued

to college students were not as profitable as those issued to nonstudents;

but once the students graduated, their cards became more profitable than

nonstudents’ accounts. This issuer, who had affinity relationships with

sports teams, professional groups, and cause related groups, told us that

their college student accounts accounted for 15 percent of their affinity

cardholders.

Some credit card issuer’s marketing was directed at college students

through affinity relationships. Universities or their components received

funds from the card issuer—either a flat fee or an amount based on factors

such as the number of cards issued or monthly charges to the cards. One

card issuer that sought affinity card relationships told us that the company

marketed to college and universities ranked highly on academic

competitiveness measures and that alumni of the top-rated schools

managed their credit responsibly. The issuer added that most of the

 34Discretionary purchases are expenditures after college students have covered tuition,

room, board, books, and fees.

35The College Board is a membership association of more than 3,800 schools, colleges,

universities, and other educational associations.

Card Issuers Market to

College Students Because

They Are Good Customers
Page 36 GAO-01-773 College Student Credit Cards

company’s affinity relationships were with universities that allowed the

company to use all marketing channels.

Card issuers used a variety of methods to market to students, including

direct mail, tabling, relationship banking, the Internet, and displays on

college campuses known as “take-ones” (fig. 12). Direct mail was a method

of marketing to college students for five of the six issuers who responded

to our questions about marketing practices. One of these four issuers told

us that direct mail and telesales accounted for more than three-quarters of

their college student accounts.36 On-campus tabling was the most visible

marketing method, and three of the issuers used tabling on and off campus

including at athletic events.37 Two of the issuers used their branch banks

as the primary method of marketing to students, offering credit card

applications to students who opened checking accounts and received

automated teller cards. All the issuers allowed college students to apply

for credit cards through their Internet sites, and students could also apply

for the credit cards of the financial institution members of Visa and

MasterCard through the Visa and MasterCard Web sites. Only one of the

issuers told us that they had an 800 telephone number that students could

call to apply for a credit card.

 36One issuer told us that their mail marketing yielded about 1 percent card issuance and

that about 9 out of 10 of their college student accounts come through mail marketing.

37One of the issuers did not mention their campus tabling activity although we observed

them tabling credit cards and other financial services on one university campus.
Page 37 GAO-01-773 College Student Credit Cards

Figure 12: Credit Card Issuers’ Marketing Methods

Source: Responses of six card issuers to GAO request for data.

Four issuers told us that they customized their underwriting standards for

college students, eliminating standard income and employment

requirements. The first issuer told us that the company had a unique

experiential scorecard for the college market with no income or

employment requirement.38 Extensive experience with college students

enabled the company to predict good credit performance based on

selective marketing, a credit bureau evaluation, and careful management

of the account once the card was issued. This issuer’s college student

accounts compared favorably with traditional accounts. The second issuer

had two sets of criteria for college students, one for students with credit

histories and another for those with no credit records. College students

with credit files were judged on the basis of ability, stability, and

willingness to repay. Applications from students who did not have credit

files were judged according to their source—that is, whether they came

from a university that had an affinity relationship with the card issuer. This

issuer told us that the company rejected most applications from college

 38A scorecard is a table listing the characteristics that provide predictive information, the

attributes of each characteristic, and the number of points associated with each attribute.

See Edward M. Lewis, An Introduction to Credit Scoring, San Rafael, CA, Athena Press,

1994.

Card Issuers Customized

Underwriting Standards

for College Students
Page 38 GAO-01-773 College Student Credit Cards

students. Reasons for denial included that the college students already had

credit available, had histories of delinquency, or had too little income.

The third issuer told us that the company had a specialized scorecard for

college students that took into account limited employment history and

other factors that set students apart from the nonstudent population.39

Employment history, salary, credit reports, credit need, and ability to pay

were important elements in the credit decision; the company also

considered year in college and grade point average. This card issuer said

that underwriting standards for other customers with characteristics

similar to those of college students (e.g., customers with little credit

experience) varied only in terms of the importance placed on income and

credit history. The fourth issuer told us that the company’s underwriting

standards required that college students be enrolled in a 2- or 4-year

college or a graduate institution; be 18 years of age; be a U.S. citizen; have

a minimum monthly discretionary income of at least $200 after rent,

tuition and food are paid for; pass scorecard approval criteria; and not

have an existing credit card account at that bank. For this card issuer,

employment was not a requirement, but an existing credit history and a

demonstrated ability to pay debts were. Again, income and credit histories

were more important factors for nonstudents. This issuer told us that its

college student portfolio was typically a low-risk portfolio, because most

applications came from the company’s banking centers rather than from

on-campus marketing efforts.

Of the two remaining credit card issuers that responded to our request for

information about their underwriting practices, one declined to provide

information, except to tell us that the risk adjusted performance of their

student portfolio was comparable to new credit customers. The remaining

issuer told us that its underwriting process was no different for college

students than it was for any other customer. This company said that it

used all available relevant information to create the most accurate risk

assessment possible and accepted only applicants that were judged to be

good risks.

 39The Equal Credit Opportunity Act allows creditors to consider an applicant’s age for the

purposes of assessing the amount and probable continuance of income and credit history.
Page 39 GAO-01-773 College Student Credit Cards

The terms and conditions some credit card issuers applied to college

student credit cards differed from the terms and conditions companies

offered their other customers (fig. 13). Two card issuers, however, treated

college students the same as other “new-to-credit” customers. Most card

issuers told us that they charged college students a variety of interest

rates, depending on the prime rate, credit experience, and other factors.

One issuer charged college students interest rates based on the prime rate

plus additional interest of between 6.9 and 10.9 percent. Another issuer

charged students interest rates ranging from 13.9 percent to 19.8 percent,

depending on credit experience. One issuer charged students different

interest rates depending on the source of the application (for instance,

mail, Internet, or campus tabling), whether or not the student had a credit

history, and the type of card issued.40 Another issuer charged a flat rate of

15.99 percent.

Figure 13: Credit Card Terms for Students and Nonstudents

Note: N/A represents not available in information provided.

Source: GAO analysis based on information provided by credit card issuers.

Most card issuers told us that the interest rates they charged varied across

customers, including college students. One issuer told us that the range of

interest rates for student credit cards was wider than the rates charged for

customers with established credit histories and pristine payment records.

Another issuer told us that the margin they added to the prime rate for

college students was between 6.9 and 10.9 percent and that this range for

nonstudents varied, depending on the type of credit card the college

 40Some cards offered cash back, points toward products, rebates toward a car purchase,

airline savings certificates, and other benefits.

Many Issuers Adjust the

Terms and Conditions of

Credit Cards for College

Students
Page 40 GAO-01-773 College Student Credit Cards

student had. For example, platinum, gold, and classic cards had a range of

2.9 percent to 12.9 percent over the prime rate, while a “reward card” had

a range of 8.99 percent to 12.99 percent over the prime rate. Two issuers

told us that their student rate was consistent with those offered to

nonstudents with similar risk profiles—typically customers with little

credit experience.

Five issuers told us that they set special low credit limits (between $200

and $2,000) for college students and adjusted these limits upward over

time if the student’s credit performance was satisfactory .41 One issuer told

us that the factors considered in raising credit limits included the length of

time the account had been open, how it had been used, and the payment

history, regardless of account type, while another issuer set credit limits

according to the students’ year in school ($700 for freshmen and

sophomores, $800 for juniors, and $900 for seniors). They said that creditlimit increases were granted only to select customers who had

demonstrated financial responsibility and were at low risk of default in the

future. Students who maintained a banking relationship with this issuer

were given higher credit limits. This issuer said that in general it gave

nonstudents higher credit limits and “more aggressive” increases than

students. Two other issuers set credit limits for college students at

anywhere from $200 to $2,000, depending on factors such as credit

experience, past performance, class year, and creditworthiness. One of

these issuers said that credit line increases were based on factors such as

payment history, account use, and external revolving debt. Still another

issuer set even stricter credit limits for college students (from $500 to

$1,000) and did not offer increases until a year after the card had been

issued (the increases were generally $500 or less).

Most of the card issuers in our study told us that they either provided

credit counseling for college students who had trouble making payments

or referred these students to credit counseling services. One issuer told us

that they were willing to help students by lowering interest rates and

adjusting payment schedules. The issuer said that when an account was

delinquent, they worked with the student to determine the cause of the

problem and take appropriate action. Another issuer told us that although

 41A credit card industry official told us that in the past many credit card issuers had

approved large credit limits for college students but were now limiting credit to students in

smaller amounts.

Card Issuers Have

Programs Designed to

Assist College Students

and Educate Them About

Credit
Page 41 GAO-01-773 College Student Credit Cards

students had primary responsibility for managing their accounts, the

company was committed to assisting those who faced debt problems.

Students could call the customer service number to discuss concerns

about their debt, and a collections specialist would review the account and

possibly reduce the interest rate or establish a minimum payment

schedule. Another issuer told us that it also tried to assist customers

experiencing financial difficulty by reducing interest rates and payments.

Two issuers had a partnership with Consumer Credit Counseling Services,

to which both students and nonstudents had access and which would

attempt to work out a no-interest payment schedule. One issuer said that

the company also connected customers with financial counseling

organizations such as Myvesta (formerly Debt Counselors of America) that

could help work out a budget for the student and negotiate a payment

schedule.

All six card issuers told us that they provided financial education

information in various formats, including television commercials,

magazine articles and advertising, brochures, and Web sites. Some of these

credit education efforts were conducted in conjunction with Visa or

Mastercard, and the information was directed at both college students and

others with little credit experience. A credit card industry official

explained these educational efforts by pointing out that the industry’s

interests were not served by having its products misused.

Although we were unable to determine the effectiveness of these credit

education efforts and the extent to which they led to responsible credit

behavior in college students, the information appeared to be widely

accessible. Literature was disseminated in several ways. One issuer

published a series of credit education brochures on topics such as money

management, the cost of credit, and developing a credit history. College

students received this information with their monthly billing statements

every 3 months. Another issuer included a brochure on responsible credit

use in “welcome packages” that were mailed to college students who

received credit cards. An industry association official also told us that the

association had worked with university officials to disseminate moneymanagement literature at freshmen orientation.

Other educational efforts relied on computers and presentations. Several

of the issuers sponsored Web sites that had credit education components

directed at college students, and one sponsored a Web site of the credit

education program of the National Consumers League. Another issuer had

an interactive CD-ROM that the company had developed with Visa to help

consumers learn about personal finance, budgeting, money management,
Page 42 GAO-01-773 College Student Credit Cards

and decisionmaking. A third issuer maintained a full-time employee who

traveled around the country conducting free financial literacy and

responsibility seminars at universities. A fourth issuer had developed

credit education seminars for educational institutions. Finally, a fifth

issuer and a credit card association provided financial support for the

Jumpstart Coalition, an organization that teaches young adults about

personal finance.42

Studies we reviewed have shown that most college students have at least

one credit card. In two nationwide studies, most students reported being

able to manage their credit card debt—that is, they said they paid off their

balances in full each month or carried a balance of between $1 and $1,000.

However, one of the studies we reviewed showed that around 20 percent

of students reported carrying a monthly balance of more than $1,000. A

third smaller study of students seeking a particular type of loan reported

an average balance of more than $2,700. Credit card debt combined with

the expenses associated with leaving college and finding a job, including

making payments on student loans, could lead those who leave college to

debt repayment problems in the future.

Credit cards were not a new phenomenon for most college students. More

than one-third of students had credit cards before they entered college,

and another 46 percent acquired them during the first year. Except for

charges for tuition and fees, their spending patterns resembled those of

nonstudents. University officials and credit counseling organizations

worried that as inexperienced users, students would not understand the

dangers of accumulating debt. In addition, one study suggested that

students with four or more credit cards, with relatively high levels of debt

and who charged their tuition and fees, could have trouble managing their

credit card debts.

We did not find a uniform response to the controversial issue of oncampus credit card marketing among the universities we visited. In

response to complaints about aggressive marketing techniques, a few

universities had adopted policies restricting credit card solicitation on

campus. Several state legislatures had considered legislation limiting oncampus credit card marketing, and one legislature had passed such a bill.

 42See Lewis Mandell, Our Vulnerable Youth: The Financial Literacy of American 12th

Graders, Washington, D.C., Jumpstart Coalition, 1998.

Conclusions
Page 43 GAO-01-773 College Student Credit Cards

But many universities we visited allowed nonacademic entities, such as

student unions and bookstores, to set their own policies. In many cases,

alumni associations received significant income from credit card

solicitation. The universities offered varying levels of educational

information on managing finances and support for college students with

credit card debt problems. Financial factors are one of many possible

reasons that students leave college prior to graduation.

The credit card issuers that responded to our inquiries participated

actively in the student market, but again they did not have a uniform set of

policies or practices. In general, college students were seen as a profitable

market over the long term, with some issuers marketing to high-end

schools. Some card issuers treated college students as a special category,

while others did not. Many issuers adjusted their underwriting standards

for students, enabling college students with little or no employment

income to obtain credit cards. The card issuers that responded to us were

also willing to work with students who had trouble managing their credit

card debt, offering options that ranged from credit counseling to reduced

interest rates and extended payment plans.

Credit cards offer clear advantages to college students because they

provide an interest free loan for students until the payment is due and a

convenient noncash payment option for both routine transactions and

emergencies. If used responsibly, credit cards allow students to build up

credit histories that will facilitate increased access to credit in the future.

However, if college students have not learned financial management skills

in their secondary education or from their parents and misuse their credit

cards or mismanage their credit card debt, the disadvantages can outweigh

the advantages. Many college students are responsible for making

important financial decisions for the first time in their lives and are naïve

about managing a budget. As is true with any credit card user, using credit

cards to make impetuous purchases can lead to extended repayment

periods and high interest charges. Because of inexperience with credit and

finance, some college students may not be financially literate and may be

at greater risk of substantial debt burdens than more experienced

consumers. Consistent misuse of credit cards by college students—

particularly combined with student loan debt—could lead to substantial

debt burdens.

We obtained comments on a draft of this report from representatives of

the credit card issuers and Visa and MasterCard officials; Student Monitor,

TERI/IHEP, and Nellie Mae officials; Board of Governors of the Federal

Reserve System’s Division of Consumer Affairs, the Federal Reserve Bank

Agency Comments

and Our Evaluation
Page 44 GAO-01-773 College Student Credit Cards

of Philadelphia, the Office of the Comptroller of the Currency; and the 12

universities we visited. The credit card issuers and their association

officials raised three points, which we summarize below. First, the credit

card industry officials said that the report conclusions, based on the

opinions of university officials, students, and credit counseling

representatives, were not necessarily an accurate reflection of all students’

experiences on that campus or the broader experience nationwide. Our

research at universities was designed to obtain information about how 12

selected universities were dealing with credit card issues, as we stated in

the draft, and not intended to be a sample projectable to universities as a

whole. The sample included a variety of 4-year universities around the

country based upon various criteria. We stratified universities according to

whether or not they were public or private, geographic region, admissions

policies, size and composition of their student body, cost of attendance,

and the existence of any affinity relationship with a credit card issuer.

University officials spoke to us in their official capacities. Many of the

university officials we spoke with had experience at other universities

prior to assuming their current position. Our fieldwork showed university

officials struggling to find an appropriate balance between a university as

a marketplace of ideas and a marketplace for commerce. We spoke with

the presidents of five state student associations, two of whom were from

some of the largest states in the country with many universities and

college students. We also spoke with representatives of three consumer

groups in three geographically different sections of the United States.

Second, the card issuers and their association representatives questioned

our focus on the Nellie Mae study of credit card usage because it was not

based on a random sample representative of the U.S. student population.

Our draft report noted that the Nellie Mae study was limited to a subset of

students who applied for a certain type of student loan. We expanded

language about the study’s limitations to the Results in Brief section of this

report.

Third, the card issuers and their association representatives objected to

references in the draft to increased bankruptcies among 18 to 25 year olds,

on the grounds that there is no reliable information indicating that the

decision to file for bankruptcy resulted from credit card debt incurred

while these individuals were college students. We agree with the

representatives and the draft did not state that the increased bankruptcies

among 18 to 24 year olds are the result of credit card debt. Our report does

state that none of the potential sources of bankruptcy data that we

contacted were able to provide or direct us to data indicating the number

of college student bankruptcy filings. We understand that many
Page 45 GAO-01-773 College Student Credit Cards

bankruptcies are associated with significant life events such as a job loss

or medical issue. However, it is reasonable to assume that in some, if not

many cases, credit card debts are a portion of the debts on which

bankruptcy filings are made. Whether or not credit card debt is a cause of

bankruptcy filings has been the subject of academic research. The card

issuers and their representatives also gave us a variety of technical

suggestions, which we incorporated, as appropriate.

Officials from the 12 universities we visited reviewed the university

section of the report. All agreed with our presentation of the information

they provided and agreed that we accurately reported the views they

shared based on their experiences. We have incorporated their

suggestions and technical comments, as appropriate.

Student Monitor, IHEP, and Nellie Mae officials reviewed portions of this

report that reported on the methodology and results of their studies. They

made technical suggestions concerning our reporting of their results,

which we incorporated.

We also obtained comments from officials of the Division of Consumer

and Community Affairs of the Board of Governors of the Federal Reserve

System as well at the Federal Reserve Bank of Philadelphia, and the Office

of the Comptroller of the Currency. All of these officials gave us technical

comments on selected pages concerning how federal bank regulators view

college student credit card portfolios in the context of a risk-based bank

examination, the advantages and disadvantages of credit cards for college

students as well as current law and legislation. We are not making

recommendations in this report.

As agreed with your offices, unless you publicly release its contents

earlier, we plan no further distribution of this report until 30 days from its

issuance date. At that time we will send copies to congressional

committees and copies will be made available to others upon request.
Page 46 GAO-01-773 College Student Credit Cards

Major contributors to this report are listed in appendix VI. If you or your

staff have any questions about this report, please contact me or Katie

Harris, Assistant Director on (202) 512-8678.

Davi M. D’Agostino

Director

Financial Markets and Community Investment
Appendix I: Scope and Methodology

Page 47 GAO-01-773 College Student Credit Cards

We were asked to respond to several concerns surrounding college

students’ use of credit cards. To meet this request, we examined (1) the

advantages and disadvantages credit card use presents to college students

and available bankruptcy data, (2) the results of key studies showing how

college students acquire and use credit cards and how much credit card

debt they carry, (3) universities’ policies and practices related to oncampus credit card marketing, and (4) the business strategies and

educational efforts credit card issuers direct at college students. We could

not address some specific questions posed by the requesters because we

were not able to obtain access to the account data of major credit card

issuers or specific information on the underwriting policies and practices.

As noted below, we are continuing negotiations with a group of credit card

issuers in an effort to develop a mutually agreeable arrangement regarding

access to appropriate data.

To describe the advantages and disadvantages of credit card use for

college students, we interviewed officials from universities and credit card

issuers, as well as representatives of student groups. We also collected and

analyzed information from the credit card industry, universities, student

groups, and consumer groups including Myvesta, the Public Interest

Research Group, Auriton Solutions (affiliated with the Association of

Independent Consumer Credit Counseling Agencies and other

organizations), and the National Consumer Law Center. To identify data

on college student bankruptcy filings, we contacted officials at the U.S.

Department of Education, Administrative Office of the U.S. Courts, U.S.

Office for Trustees, and an academic who has conducted empirical

research on consumer bankruptcy issues.

To learn how college students acquire and use credit cards and how they

manage credit card debt, we searched for studies on college students’

experiences with credit cards—how students acquired and used cards and

paid their credit card bills. We selected and analyzed three studies to

highlight in this report. Two of them (one by the nonprofit, nonpartisan

groups The Education Resources Institute and Institute for Higher

Education Policy and one by a marketing research firm, Student Monitor)

were selected because their surveys were based on random, statistically

valid samples of larger and broadly defined populations of college

students in the United States. These two studies were limited by the fact

that their surveys relied on self-reporting from the students, and research

suggests that respondents tend to underreport information that could

Appendix I: Scope and Methodology
Appendix I: Scope and Methodology

Page 48 GAO-01-773 College Student Credit Cards

reflect badly on them—for example, indebtedness.1 We selected a third

survey done by Nellie Mae—a national provider of higher education loans

for students and parents—because its research was based on credit

reports and not self-reported data. This study was limited by sample

selection bias, as the sample was drawn from only those students who

applied for a certain type of private loan. These students either did not

qualify for federal student loans or had already received the maximum

amount available to them. It is not clear how those who apply for such

private loans from Nellie Mae are similar to or different from other college

students in the United States. We discussed the methodology and results

of these three studies with officials of the sponsoring organizations. We

also discussed some or all of these studies with an academic expert,

officials of the American Council on Education, and the USA Group, a

guarantor and administrator of student loans.

The three studies share limitations common to this kind of research (fig.

14 provides details of the studies’ methodologies). Two of the studies

relied on self-reports of personal financial information and may suffer to

some degree from errors in lack of memory, poor estimates, and

underreporting of credit card balances owing to the social stigma of being

in credit card debt. The practical difficulties of conducting such surveys—

such as obtaining a sample that covers the entire population under

consideration and gaining the cooperation of enough of the sample to

make it representative—may also limit the usefulness of these results.

Response rates of the two surveys were not reported. A low response rate

may jeopardize the representativeness of a sample survey. The Nellie Mae

study, which relied on credit bureau reports, avoided the problems that

are common to surveys that rely on reports from individuals. But it is

restricted to a special subpopulation of loan applicants, and the results are

probably not representative of a larger and typical college-student

population as a whole.

 1

See David G. Gross and Nicholas S. Souleles, “An Empirical Analysis of Personal

Bankruptcy and Delinquency” Working Paper 98-28-B (University of Pennsylvania, The

Wharton School, Financial Institutions Center, 98-28-B, Nov. 11, 1999).
Appendix I: Scope and Methodology

Page 49 GAO-01-773 College Student Credit Cards

Figure 14: Three Studies on College Students and Credit Cards

Source: GAO analysis of three studies.

We identified other studies on credit cards and college students, but these

reports used methodologies that did not include random sampling

techniques (app. III). We could not draw inferences from these reports

about the student population as a whole or even about a specific subset of

students. For this reason, these studies were not included in the main part

of this report.

To describe universities’ responses to credit card marketing, we

judgmentally selected and visited 12 colleges and universities and

conducted about 100 structured interviews. We also collected

documentation at universities including university policies, credit

education materials, and credit card applications. We observed tabling and

other marketing directed at college students on these campuses. We

compiled a list of colleges and universities chosen for their status as public

or private institutions, their geographic region, their admissions policies,

the size and composition of their student body, the cost of attendance, and

the existence of an affinity relationship with a credit card issuer. We

attempted to visit a varied sample of 4-year colleges and universities. Nine
Appendix I: Scope and Methodology

Page 50 GAO-01-773 College Student Credit Cards

of the 12 universities we selected were public and 3 were private.2 Five had

more selective or most selective admissions standards, according to

college entrance test scores, and seven were less selective. Six of the

universities had small- to medium-sized undergraduate student body

populations—10,000 or fewer students—and 6 were large universities—

greater than 10,000 students. Three of the universities had substantial

minority student populations—Hispanic, Asian, and others—and one of

the colleges was a historically African American school.

We interviewed about 100 university officials from a number of university

administrative offices (the dean of students and heads of student affairs,

bursar, comptroller, and financial aid), as well as officials from student

unions, alumni associations, athletic departments, bookstores, student

governments, and others including some credit union officials. On

campuses, we collected credit card applications from various locations,

including student unions, alumni association offices, credit unions and

other private financial service providers, and bookstores. We obtained and

analyzed university documents relating to policies on credit card

solicitation on campus, financial education at freshman orientation, and

other issues. We did not verify the accuracy of the testimonial and

documentary information university officials provided.

To describe the business strategies and practices of credit card issuers—

marketing, underwriting, and educational efforts—we selected 12 of the 20

largest credit card issuers in the United States. With one exception, all the

issuers marketed credit cards to college students. We included two credit

card companies that issued affinity cards through university alumni

associations and athletic departments and a regional financial services

company that did not market nationally. In October 2000, we sent the

issuers a letter requesting data and an opportunity to discuss issues

related to college students and credit cards. This letter included a draft

pledge of confidentiality that we were prepared to sign, a signed pledge of

confidentiality from our requesters, and a request for aggregate account

data from college students and other consumer group accounts.

 2

We included more public universities in our sample, because most college students attend

public schools. Thirty-four percent of 4-year institutions of higher education in the United

States are private nonprofit or proprietary, and 66 percent are public, according to the

National Center for Education Statistics. Because public institutions tend to be larger than

private institutions, more students attend public universities than these percentages

suggest.
Appendix I: Scope and Methodology

Page 51 GAO-01-773 College Student Credit Cards

Card issuer participation in our study was strictly voluntary; we have no

legal right of access to their account data or other business information.

Several card issuers chose not to meet with us, and after 4 months of

attempting to arrange meetings, we had met with only five. The issuers

that did agree to meet with us would generally discuss their marketing and

educational efforts and were not inclined to discuss their underwriting

practices, citing the proprietary nature of the information and issues of

“business competition.” One card issuer declined to meet with us or

answer our questions. Due to confidentiality concerns, all of the issuers

declined to allow us access to data on their college student accounts in a

manner that would allow us to verify authenticity. In January 2001, we

asked 10 of the 12 card issuers to provide written answers to questions

about their business strategies and educational efforts directed at college

students; six responded.3 (App. V lists the questions we asked the nine

issuers.) To address the educational efforts of the credit card industry, we

also met with Visa and MasterCard officials and reviewed documentation

they provided. We did not verify the accuracy of the testimonial and

documentary information that credit card issuers provided and some

information issuers provided did not respond precisely to our questions.

In declining to provide us direct access to data about college student

credit cards, the issuers cited their concerns about the proprietary and

confidential nature of their data. However, after we addressed these

concerns, in January 2001, eight credit card issuers expressed willingness

to participate in a study of account data that would compare college

students with other groups. Coordinating through the Consumer Bankers

Association, these issuers offered to have a third party of their choosing

do a study based on their data. We accepted the idea of a third-party

contractor assembling a database drawn from the issuers’ account data.

To meet our auditing standards, it will be necessary for us to retain and

supervise a contractor independent of the credit card industry.

Government auditing standards require that “in matters relating to the

audit work, the audit organization and the individual auditors, whether

government or public, should be free from personal and external

impairments to independence, should be organizationally independent,

and should maintain an independent attitude and appearance.”

4

 As of May

 3

Two of the issuers had either sold their credit card portfolios or were in the process of

selling them during our study, and we dropped them from our sample.

4

Comptroller General of the United States. Government Auditing Standards. Washington,

D.C., Government Printing Office, June 1994.
Appendix I: Scope and Methodology

Page 52 GAO-01-773 College Student Credit Cards

2001, we are continuing to explore the feasibility of using an independent

contractor to create a database with verified data provided by the eight

credit card issuers that we can analyze.

We also met with federal bank regulatory officials from the Board of

Governors of the Federal Reserve System, the Federal Reserve Bank of

Philadelphia, and OCC. We met with OCC and the Federal Reserve Board

because they oversee most of the large credit card issuers. We discussed

with the Federal Reserve and OCC the credit card industry in general and

the issue of credit cards and college students in particular, as well as

applicable laws, disclosure requirements, and examination practices. We

also spoke with officials from the Federal Trade Commission, Associated

Credit Bureaus, American Bankruptcy Institute, VISA, and MasterCard.

The Federal Trade Commission has enforcement responsibility for lenders

that are not under the supervision of another federal agency. We obtained

comments on a draft of this report from representatives of the credit card

issuers who participated in this study and the Consumer Bankers

Association, and from officials of the Board of Governors of the Federal

Reserve System and the universities we visited. We incorporated technical

comments as appropriate.

We conducted our review at credit card issuers and universities in various

cities and states around the United States. To maintain the confidentiality

of the issuers and universities, we are not disclosing the names of the

states and cities where we did our field work. We conducted our work

between July 2000 and April 2001 in accordance with generally accepted

government auditing standards.
Appendix II: State Legislation Regarding

Credit Card Solicitation at Institutions of

Higher Education, 1999 to 2001

Page 53 GAO-01-773 College Student Credit Cards

This appendix presents information about state legislation related to credit

card solicitation on college and university campuses. 1 We obtained basic

information about legislative activity from the National Conference of

State Legislatures, secured additional information about individual bills

from sponsors or other knowledgeable sources in the individual state

legislatures, reviewed current information published by state legislatures,

and reviewed information on state legislation found in Lexis databases.

Proposed legislation and resolutions were introduced in at least 24 states

from 1999 through Mid-May 2001. Legislative provisions range from

requests to study the effects of credit cards on college students to

proposals limiting solicitation on campuses. Three bills, one in Arkansas

and two in Louisiana were enacted. Legislators we spoke with told us that

the impetus for their proposed legislation included complaints from

parents of college students and from student groups, as well as negative

media reports about credit card solicitation on college campuses.

Legislatures in five states proposed studies of credit cards on college and

university campuses.

The proposed legislation in several states would regulate credit card

solicitation in a variety of ways including

1. a ban on the use of incentives to entice students to apply for credit

cards;

2. a requirement that a student’s parent or legal guardian give written

consent to the student’s credit card application;

3. a provision to protect parents of college students from the debt

collection actions of credit card issuers;

4. a requirement that credit card issuers register with the college or

university before soliciting on campus;

5. a requirement that credit card issuers, universities, or organizations

provide debt education materials or a program for students;

 1

The described legislation is a partial listing of proposed or enacted state legislation aimed

at regulating credit card solicitation at institutions of higher education and reflects the

most current available information. Bills that were withdrawn or that initially failed and

were reintroduced at a subsequent session are excluded from this presentation. The most

recently amended version of proposed legislation may not be presented.

Appendix II: State Legislation Regarding

Credit Card Solicitation at Institutions of

Higher Education, 1999 to 2001
Appendix II: State Legislation Regarding

Credit Card Solicitation at Institutions of

Higher Education, 1999 to 2001

Page 54 GAO-01-773 College Student Credit Cards

6. a provision that colleges, universities, or education departments set

policies and procedures for controlling credit card solicitation on

campus; and

7. a prohibition against the dissemination of information on students to

credit card issuers or extenders of credit for compensation.

Table 2: Proposed or Enacted State Legislation on Credit Card Solicitation at Institutions of Higher Education from 1999 to

2001

State Year introduced Status Summary of law, bill or resolution

1. Arkansas

Act 1328

House Bill 1147

A.C.A. 4-104

 January 1999 Enacted 4/12/99 Enacted:

1. Prohibits face-to-face offers of gifts or promotional incentives to

persons under age 21 on the campus of an institution of higher

education to entice them to apply for credit cards.

2. Requires that, prior to any personal solicitation in which gifts or

other promotional incentives are being offered, the credit card

issuer verify the identity and age of the person to be solicited by

review of credible means of identification.

3. Prohibits the issuance of a credit card whose application was

obtained in violation of Act 1328.

4. Requires a credit seminar be provided at freshman orientation if

institution of higher learning permits solicitation of credit cards at

athletic events.

5. Provides that violation of section will be a misdemeanor and

imposes a fine of $500 to $1000.

6. Exempts solicitation by banks and credit unions located on

campuses if solicitation is done in the office.

7. Applies to public and private universities, colleges, technical

colleges, and community colleges located in Arkansas.

2. California

Senate Bill 796

February 25,

1999

Passed the

Senate 8/25/00;

Passed the

Assembly

8/22/00; Vetoed

by governor

9/18/00

Proposed:

Requests the University of California and the governing boards of

public and private institutions of higher education, and requires the

California State University and Community Colleges to adopt

policies, in accordance with specified requirements, to regulate

marketing practices used on campuses by credit card companies. In

adopting the policies, the intent of the legislature is that the following

requirements be considered:

a) That sites at which credit cards are marketed be registered with

campus administration and consideration be given to limiting the

number of sites allowed on a campus.

b) That marketers of credit cards be prohibited from offering gifts to

students for filling out credit card applications unless the student

has first read a credit card education brochure prepared either

by the college or university or by a nonprofit credit card or debt

education organization.

c) That credit card and debt education materials be included in

brochures inserted in shopping bags at campus bookstores.

d) That credit card and debt education and counseling sessions

become a regular part of campus programs, including those

relating to new student orientation.
Appendix II: State Legislation Regarding

Credit Card Solicitation at Institutions of

Higher Education, 1999 to 2001

Page 55 GAO-01-773 College Student Credit Cards

State Year introduced Status Summary of law, bill or resolution

Assembly Bill 521 February 21,

2001

Approved by

Committees on

Higher

Education

Banking and

Finance, Rereferred to

Committee on

Appropriations,

5/3/01

Proposed:

1. Defines student credit card as a credit card provided to a

student at a public or private college or university and provided

to the student solely based on enrollment and not based on his

or her income. The definition does not include a credit card

issued to a student who has a cocardholder or cosigner who

would otherwise qualify for a credit card other than a student

credit card.

2. Requires that student be issued a credit limit of $500 and

authorizes raise in credit limit to $1000 if student cardholder

demonstrates a good payment record for 12 months.

3. Requests governing body of private or independent colleges or

universities and requires the trustees and board of governors of

the state universities and community colleges to adopt policies

regulating the marketing practices used on campuses by credit

card companies. These policies are to address:

a) That sites at which credit cards are marketed be registered on

campus and consideration be given to limiting the number of

sites allowed on campus, and

b) The prohibition of gifts to students for completing credit card

applications, and provision of credit card and debt education

and counseling sessions as a regular part of campus orientation

of new students.

Senate Bill Number 43 December 8,

2000

Approved by

Committee on

Education, Rereferred to

Committee on

Appropriations,

4/25/01

Proposed:

Every public or private institution of postsecondary education is

prohibited from disclosing to anyone not employed by the institution

any directory information concerning a current or former student

without disclosure to the student of the purposes for which the

information will be used and the written permission of the student to

disclose the information. Directory information includes name,

address and dates of enrollment.

3. Delaware

Senate Bill Number 95

April 3, 2001 Referred to

Committee on

Natural

Resources and

Environmental

Control, 4/3/01

Proposed:

Prohibits credit card institutions and other persons from soliciting

credit cards or similar loan products on the campuses of educational

institutions in Delaware that receive all or part of their operating

budgets from State appropriations. Provides civil penalties for

violation of the prohibition.

Senate Bill Number 87 March 22, 2001 Referred to

Senate

Committee on

Natural

Resources and

Environmental

Control, 3/22/01

Proposed:

Prohibits credit card institutions and other persons from issuing a

credit card or similar loan product with a credit limit or loan amount

that exceeds $2,500 to a person under the age of 21 unless the

person can demonstrate sufficient income for the limit or the

person’s parent or guardian cosigns for the account.

4. Hawaii

House Resolution

Number 32 H.D. 1

February 17,

2000

Adopted

4/24/2000

Adopted:

1. Requests the Board of Regents of the University of Hawaii and

the governing bodies of private colleges and universities to:

a) study the direct solicitation of students on campus for credit card

accounts; and

b) offer consumer credit and money-management seminars as part

of freshmen orientation to ensure that students are wellinformed about the principles of credit and sound money

management.
Appendix II: State Legislation Regarding

Credit Card Solicitation at Institutions of

Higher Education, 1999 to 2001

Page 56 GAO-01-773 College Student Credit Cards

State Year introduced Status Summary of law, bill or resolution

5. Kansas

House Bill Number

2153

January 24, 2001 To House

Committee on

Appropriations,

1/25/01

Proposed:

1. No credit card issuer, while on any campus of an institution of

postsecondary education, shall solicit any individual to apply for

a credit card.

2. Shall not apply to solicitation of a credit card application by an

officer, agent or employee of a financial institution that has its

place of business located on campus and the solicitation occurs

during normal business hours.

3. No officer, agent or employee of the institution of postsecondary

education shall knowingly allow any credit card issuer to make

any solicitation that violates the section, or knowingly sell or give

to any credit card issuer any list of names or addresses of

persons who are students at or employed by the institution.

4. Fines of between $500 and $5,000 shall apply to violations.

6. Kentucky

House Bill 384

January 18, 2000 Regular Session

Adjourned

4/14/00; no

carryover

Proposed:

1. Requires credit card issuer to register with university before

soliciting students on campus.

2. The interest rate and annual fee must be prominently displayed

at the site on campus where the credit card issuer solicits

students.

3. If the institution permits the solicitation of students on campus

for credit cards, the institution is to include a credit seminar with

freshman orientation.

4. Prohibits the offer of gifts or any other promotional incentives on

campus to students to entice students to apply for credit cards.

5. Prohibits any debt collection by a credit card issuer against

parent or legal guardian of the student unless the parent or

guardian has agreed in writing to be liable for credit card debts

of the student.

6. Directs that the credit card issuer is guilty of a misdemeanor and

is to be fined from $500 to $1,000 for each violation.

Senate Resolution

Number 43

January 19, 2000 Adopted 3/8/00 Adopted:

The governing board of each institution of higher education in the

Commonwealth is urged to provide a credit seminar in each

institution’s freshman orientation and to provide its students with

counseling on how to use credit wisely.

7. Louisiana

House Bill 1353

Act 1110

L.R.S. 9.3578.1 through

3578.5, Campus Credit

Card Solicitation Act

March 26, 1999 Enacted 7/15/99 Enacted:

1. Requires credit card issuers to register with the educational

institution prior to engaging in solicitation of college students on

a college campus.

2. Prohibits a credit card issuer from taking any debt collection

action against the parent or legal guardian of the student, unless

the parent or guardian has agreed in writing to be liable for the

debts.

3. Provides for fines of up to $1,000 for each violation.

House Bill 195

Act 934,

L.R.S. 17:3351.2,

Dissemination of

Certain Information by

Public Postsecondary

Institutions

February 1,

1999

Enacted

7/15/99

Enacted:

1. Prohibits a public post secondary educational institution from

permitting the dissemination of solicitations, advertisements,

application or information concerning consumer credit cards on

campuses to undergraduate students during registration for

classes.

2. Prohibits an institution from permitting any of its employees to
Appendix II: State Legislation Regarding

Credit Card Solicitation at Institutions of

Higher Education, 1999 to 2001

Page 57 GAO-01-773 College Student Credit Cards

State Year introduced Status Summary of law, bill or resolution

disseminate solicitations, advertisements, application or

information concerning consumer credit cards to undergraduate

students at any time.

3. Prohibits the institution from providing information on any

student to the extender of credit for compensation.

House Study Request

No. 45

May 21, 1999 Approved

5/27/99a

Approved:

1. Study by House Committee on Commerce to address:

a) the practicality of requiring credit card companies soliciting on

college campuses to register with the college before soliciting;

b) the practicality of requiring college students to receive parental

consent to obtain a credit card; and

c) prohibiting debt collection against parents or guardians of

college students.

2. Study to report findings to the House of Representatives before

the convening of the 2000 session. No such report was issued.

House Resolution 23 April 12,1999 Adopted

4/26/99

Adopted:

1. Urges and requests Board of Regents to encourage institutions

of higher education to provide information on consumer credit

and the dangers of credit card debt to college students and their

parents, and to disseminate such information on campus in any

other manner deemed appropriate.

2. Information provided shall include consumer awareness

information regarding good credit, sound money management,

and the potential impact of credit card debt on personal finances

and future employment, information about obtaining student

loans to complete undergraduate, graduate, and professional

school, as well as reputable resources, which offer consumer

credit information or counseling without charge or for a modest

fee.

8. Maryland

House Bill 875

February 9, 2001 To Committee

on Commerce

and Government

Matters, 2/9/01

Proposed:

1. Requires the Maryland Higher Education Commission (MHEC)

to establish and update written guidelines concerning the

solicitation of students by a credit card issuer on the campus of

an institution of higher education.

2. Requires a higher education institution that permits the

solicitation of students by credit card issuers on its campus to

comply with the MHEC’s guidelines.

3. Requires that established guidelines of the MHEC on solicitation

of credit cards at higher education institutions not be construed

as permitting solicitation of credit cards.

House Bill 959 February 9, 2001 Unfavorable

Report by

Committee on

Commerce and

Government

Matters, 3/12/01

Proposed:

1. Requires credit card issuers that conduct marketing activities on

a campus of an institution of higher education to provide a

program of education on the responsible use of credit to

students on that campus and their families.

2. Prohibits the issuance of a credit card to a student enrolled in

the institution of higher education unless the application

submitted by the student includes certain proof that the

applicant has attended the education program.

3. Prohibits credit card issuers from offering gifts in exchange for

the completion of a credit card application under certain

circumstances.
Appendix II: State Legislation Regarding

Credit Card Solicitation at Institutions of

Higher Education, 1999 to 2001

Page 58 GAO-01-773 College Student Credit Cards

State Year introduced Status Summary of law, bill or resolution

4. Prohibits credit card issuers from purchasing from an institution

of higher education certain information about students at the

institution of higher education.

House Bill 45

Senate Bill 470

July 2000

prefiled for 2001

H.R. 45:

Unfavorable

Report by

Commerce and

Government

Matters, 2/12/01;

S.B. 470 was

withdrawn from

further

consideration,

2/27/01

Proposed:

1. Limits the total amount of credit that may be extended by credit

card issuers to students under the age of 23 years at institutions

of higher education.

2. Prohibits a credit card issuer from increasing the amount of

credit that may be extended to the students under specified

circumstances.

3. Prohibits a credit card issuer from opening a credit card account

for or issuing a credit card to the students under specified

circumstances.

House Bill 764 February 10,

2000

General

Assembly

adjourned

4/10/00, no

carryover

Proposed:

1. Prohibits credit card issuers from purchasing or obtaining from

an institution of higher education the names and addresses of

students at the institution.

2. Prohibits credit card issuers from offering gifts or other

promotional incentives to a student at a higher education

institution in connection with an application for a credit card.

3. Requires credit card issuers that solicit credit card applicants on

campuses of higher education institutions to provide

opportunities for students at the institution of higher education to

become educated about the proper use of credit cards, methods

to avoid excessive indebtedness, and how to manage debt

responsibly.

4. Prohibits a credit card issuer from taking legal action against the

parent or legal guardian of a student at a higher education

institution for the student’s credit card debt unless the parent or

legal guardian agrees in writing to be liable.

9. Massachusetts

House Bill Number

3665

January 3, 2001 Held in Joint

Committee on

Banking and

Commerce,

5/17/01

Proposed:

Rules and regulations prescribed by the Commissioner of Banks

shall provide that no solicitation shall be made to a consumer under

the age of 21 years on any college campus.

House Bill Number

3664

January 3, 2001 Held in Joint

Committee on

Banks and

Banking,

5/17/01

Proposed:

No application for credit shall be provided or distributed in any

manner to any person under the age of 25 if such rate, finance

charge or credit limit is greater that the rate, finance charge or credit

limit being offered at that time to persons 25 years of age and older.

House Bill 2866 January 3, 2001 In Joint

Committee on

Education, Arts

and Humanities,

3/13/01

Proposed:

The Massachusetts Board of Higher Education shall create rules and

regulations governing credit card company access to all

Massachusetts public higher education institutions and suggest rules

and regulations to all Massachusetts private higher education

institutions.

10. Missouri

House Bill 683

February 7, 2001 From House

Committee on

Education,

3/7/01

Proposed:

1. Every public institution of higher learning in Missouri that

collects personal information from students, including but not

limited to names, campus or home addresses, telephone

numbers or other identifying information in student or campus
Appendix II: State Legislation Regarding

Credit Card Solicitation at Institutions of

Higher Education, 1999 to 2001

Page 59 GAO-01-773 College Student Credit Cards

State Year introduced Status Summary of law, bill or resolution

directories, shall include in any forms, telephone services or

computer services used in the student’s registration for each fall

semester a provision in which the student shall indicate whether

the student wishes to receive solicitations, offers or other

advertisements based on such directory listing. Such forms,

telephone services or computer services shall also include a

provision in which the student shall choose whether to have his

or her name listed in the directory, and the institution shall not

list any student who chooses not to be listed.

2. If the student chooses not to be included in the directory and not

to receive solicitations, the institution shall not knowingly sell or

distribute the name of such student to any entity that uses such

information either to engage in advertising, trade or commerce

or for offers of credit.

3. The coordinating board of higher education shall adopt policies

to provide for dissemination of information to all public

institutions of higher education in Missouri regarding the

responsible use of credit by the students at such organization.

Such policies shall, at a minimum, provide the following:

a) If an institution conducts a new student orientation program for

students, parents or both, the institution shall include in such

session information on the responsible handling of credit and

shall strongly encourage full attendance by incoming students;

b) All institutions shall provide an educational seminar on the

responsible handling of credit and the consequences of its

abuse, which shall occur not less than once each semester; and

c) All institutions shall include within their student conduct guide or

comparable standards manual a chapter or section on the

responsible use of credit.

4. Every public institution of higher education in Missouri shall

adopt and enforce a policy governing the solicitation and

marketing of commercial and noncommercial products and

services, including but not limited to credit-related products to its

students, faculty, alumni, provided that such policy shall: (1) be

nondiscriminatory; (2) protect the best interests and welfare of

its students.

5. Every public institution of higher education in Missouri that

receives either money for the distribution of credit cards to its

students or any percentage of money from the use of credit

cards bearing the college or university name or logo, shall report

the amount of such moneys or any such percentage that it

received, as well as how such monies were expending during

the previous fiscal year, to the coordinating board of higher

education; and use at least 50 percent of the moneys received

pursuant to this subsection toward individualized credit

counseling programs at such school.

11. New Hampshire

House Bill 1364

December 1999 Failed to pass

House 2/17/00

Proposed:

Establishes a study committee on the impact of student credit card

debt and to determine if oversight and regulation of credit card

solicitation on college campuses is recommended.

12. New Jersey March 29, 2001 Referred to Proposed:
Appendix II: State Legislation Regarding

Credit Card Solicitation at Institutions of

Higher Education, 1999 to 2001

Page 60 GAO-01-773 College Student Credit Cards

State Year introduced Status Summary of law, bill or resolution

Senate Bill Number

2283

Senate

Commerce

Committee

3/29/01

Requires a public institution of higher education to establish a

financial management program for its students if the institution

enters into an agreement for the direct solicitation of credit cards to

its students.

The financial management program is to be funded by the credit

card issuers and is to conform to the guidelines for the program

established by the Department of Banking and Insurance.

If a student has not successfully completed the financial

management program prior to entering a credit card agreement

pursuant to a direct solicitation, the student would not be liable for

any interest on the debt.

Assembly Bill 1136 January 11, 2000 From Assembly

Committee on

Education,

2/28/00

Proposed:

Prohibits public institutions of higher education from entering into any

agreement, or permitting any of its agents or student organizations

from entering into any agreement for the direct merchandising of

credit cards to any students.

13. New Mexico

Senate Memorial 7b

January 1999 Approved

2/25/99

Approved:

Requests state educational institutions to eliminate or curtail oncampus solicitation of credit cards.

14. New York

Senate Bill 1232

Assembly Bill 6706

S.B. 1232,

January 18, 2001;

AB. 6706, March

6, 2001

In Senate

Committee on

Higher

Education,

1/18/01;

Assembly

Committee on

Higher

Education,

3/6/01

Proposed:

Prohibits the State University of New York (SUNY) and the City

University of New York (CUNY) from entering into any agreement for

the direct merchandising of credit cards to any enrolled student.

Assembly Bill

1793

Senate Bill 36

January 2001 Referred to

Assembly

Judiciary

Committee,

1/16/01;

Recommitted to

Senate Judiciary

Committee,

3/12/01

Proposed:

Requires parental approval before a credit card may be issued to an

unemancipated child (defined as a person less than 22, who remains

a dependent or in the custody of a parent or legal guardian) without

the express written consent of the child’s parent or legal guardian.

15. North Carolina

Senate Bill 800

April 3, 2001 Referred to

Committee on

Rules and

Operation of the

Senate,

4/3/01

Proposed:

Authorizes a research commission to study the issue of credit card

solicitation, including the study of whether the University of North

Carolina and private colleges and universities should adopt policies

that restrict direct credit card solicitation of students who reside on

campus.

House Bill 1107 April 1999 General

Assembly

adjourned

7/13/2000, no

carryover

Proposed:

1. Requires credit card issuers to obtain the written consent of

parents or legal guardians of any student that they solicit for a

credit card who submits a credit card application.

2. Provides that parents or guardians who give their consent will

not be liable under the credit card agreement unless they

specifically agree to be liable.
Appendix II: State Legislation Regarding

Credit Card Solicitation at Institutions of

Higher Education, 1999 to 2001

Page 61 GAO-01-773 College Student Credit Cards

State Year introduced Status Summary of law, bill or resolution

3. Makes it an unlawful trade practice for the credit card company

to take any debt collection action against a parent or guarding

who did not agree to be liable under the credit card agreement.

4. Provides for civil and criminal penalties.

16. North Dakota

Senate Concurrent

Resolution 4040

February 15,

2001

Failed to pass

House

3/20/01

Proposed:

Resolves that the Legislative Council study the problems associated

with credit card companies marketing credit cards to college

students and report legislation to implement the findings and

recommendations to the legislature.

Senate Concurrent

Resolution 4041

February19, 2001 Failed to pass

House 3/20/01

Proposed:

Resolves that the Legislative Council study the financial impact of

credit card fees imposed on public institutions of higher education

and the social effect of credit card debt on young adults and report

its findings and recommendations to the legislature.

17. Oklahoma

Senate Concurrent

Resolution 1

December 2000 To Senate

Committee on

Appropriations,

2/6/01

Proposed:

The Oklahoma State Regents for Higher Education and any

organizations associated with state-supported higher education

institutions are requested to terminate any existing contracts with

credit card issuers, and to cease entering into any contracts in the

future, to cease any practices that allow credit card issuers to use

space or facilities of a state-supported higher education institution for

the purpose of taking applications for credit cards, issuing credit

cards, providing inducements or otherwise merchandising credit

cards, to persons under 21 years of age, who are not financially

independent, without the express written approval of such person’s

parent or legal guardian.

Senate Concurrent

Resolution 3

March 22, 1999; Adopted, May

28, 1999

Resolved:

The Oklahoma State Legislature requests that Oklahoma public

institutions of higher education include a consumer credit education

program as part of new student orientation.

18. Pennsylvania

Senate Bill 137

January 29, 2001 Passed Senate,

sent to House,

5/8/01; Motion to

reconsider in

Senate granted,

5/8/01

Proposed:

1. The state board of education shall require public and private

institutions of higher learning to adopt a policy to regulate the

marketing practices used on campuses by credit card

companies. In adopting a policy, the educational entities shall

consider the following requirements:

a) registering on campus credit card marketers;

b) limiting credit card marketers to specific college campus sites

designated by the administration;

c) prohibiting credit card marketers from offering gifts to students in

exchange for completing a credit card application unless the

student has read a credit card debt education brochure;

d) providing a credit card debt education brochure with campus

bookstore purchases; and

e) developing a credit card debt education presentation to be

incorporated into orientation programs offered to new students.

House Bill 27 January 8, 1999 Referred to

House

Committee on

Education, No

Proposed:

1. Requires a credit card issuer to register with an appropriate

official of the institution of higher education its intent to solicit the

student before engaging in the solicitation of a student on a
Appendix II: State Legislation Regarding

Credit Card Solicitation at Institutions of

Higher Education, 1999 to 2001

Page 62 GAO-01-773 College Student Credit Cards

State Year introduced Status Summary of law, bill or resolution

action by

committee

1/20/99

college campus. “Student” means a person under age 21 at an

institution of higher education on a full-time or part-time basis.

2. Requires the registration to include the principal place of

business of the credit card issuer and be in a form as required

by the Department of Education.

3. Renders the application for a credit card executed by a student

who was solicited for the credit card on a college campus to be

void and unenforceable unless the parent or legal guardian of

the student consents in writing to the student’s submission of

the application to the credit card issuer.

4. Establishes that parental consent given is not to be construed

as consent to be liable under the credit card agreement unless

the parent or legal guardian specifically agrees in writing to do

so.

5. Prohibits the credit card issuer from taking any debt collection

action against the parent or legal guardian of a student for

whom a credit card has been issued unless the parent or legal

guardian has agreed in writing to be liable for the debts of the

student under the credit card agreement.

19. Rhode Island

House Bill 5780

February 6, 2001 Passed House,

referred to

Senate

Committee on

Corporations

5/9/01

Proposed:

1. Prior to engaging in any credit card marketing activity on any

campus, a credit card issuer shall register with the educational

institution.

2. Makes it unlawful to offer gifts on campus in connection with the

solicitation of credit cards.

3. If an institution permits credit card solicitation, it must require all

new students to attend a comprehensive seminar on the

responsible use of credit. The seminar should include the

following:

a) A full explanation of the financial consequences of not paying off

credit card balances in full within the time specified to avoid

interest charges, including an explanation of how the credit card

issuer computes interest on unpaid balances;

b) A full explanation of the impact of a shift from an introductory or

initial interest rate to an ongoing interest rate that is higher,

including the exact time when the higher ongoing interest rate

takes effect, and the description of the acts on the part of the

cardholder that will cause an immediate shift to the higher

interest rate.

c) A full explanation, with examples, of how long it would take to

pay off various illustrative balance amounts by paying the

minimum monthly payment required under the credit card

agreement;

d) A full explanation of credit related terms, including fixed rates,

variable rates, introductory rates, balance transfers, grace

periods, annual fees, and any other fees charged by the credit

card issuer.

e) A full discussion of the generally accepted prudent uses of

credit, and the consequences of imprudent uses, as presented

by recognized credit counseling agencies.

4. All qualifying students shall be issued a certificate of successful

completion of the credit seminar.

5. A person violating the provision is guilty of a misdemeanor. Any
Appendix II: State Legislation Regarding

Credit Card Solicitation at Institutions of

Higher Education, 1999 to 2001

Page 63 GAO-01-773 College Student Credit Cards

State Year introduced Status Summary of law, bill or resolution

person or firm shall be prohibited from maintaining any civil

action for the recovery of debt created through the use of any

credit card obtained in violation of the provisions.

20. South Carolina

Senate Bill 922

January 11, 2000 Sent to

Committee on

Banking and

Insurance,

1/11/00

Proposed:

Prohibits the distribution of applications and advertising and any

other form of solicitation for ownership of a seller credit card by a

credit card issuer on the campus of a public institution of higher

learning.

House Bill 3595 February 15,

2001

Passed House,

to Senate

Committee on

Banking and

Insurance

5/17/01

Proposed:

1. A public institution of higher learning in South Carolina must

develop, maintain, and enforce a creditor-marketing policy

regulating the distribution of applications, promotion, marketing,

and other forms of solicitation for ownership of a credit card by a

credit card marketer on its campus. This creditor-marketing

policy must be filed with the South Carolina Commission on

Higher Education. The Commission on Higher Education must

maintain a master file of all policies and make the information

available for public inspection.

2. In preparing and adopting the policy, the board of trustees or its

designee must consider:

a) registering on-campus marketers;

b) providing a credit card debt education brochure with each

campus bookstore purchase;

c) developing a credit card debt education presentation as a part of

orientation programs offered to new students; and

d) prohibiting credit card marketers from offering gifts to students in

exchange for completing a credit card application unless the

student has been given a credit card debt education brochure.

3. A public institution of higher learning in South Carolina that has

not adopted this policy may not allow a credit card marketer to

distribute applications or promotional or marketing materials, or

otherwise solicit for ownership of a credit card on its campus. A

credit card marketer is prohibited from distributing applications

or promotional materials, or otherwise soliciting for ownership of

a credit card on the campus of a public institution of higher

learning in South Carolina that has not adopted a policy.

4. The section does not apply to solicitation by a financial

institution physically located on a campus where normal banking

activities are conducted if the solicitation takes place within its

offices, solicitations by E-mail, or telephone, or contracts

between institutions and creditors in existence on the date of the

act.

5. The section does not apply if the solicitation occurs in the

campus offices of the card marketer.

21. Tennessee

House Bill 993

Senate Bill 1554

February 2001 H.B. 993 to

House

Committee on

Education

2/12/01; S.B.

1554 to Senate

Committee on

Commerce,

Labor and

Proposed:

1. Requires the institutions of state board of regents and the

University of Tennessee that collect identifying information from

students for publication in student or campus directories, to

supply a form allowing students to indicate they do not want to

receive solicitations based upon the directory listing.

2. Prohibits any credit card issuer from recruiting potential student

cardholders on campus or at college or university facilities, or

through student organizations.
Appendix II: State Legislation Regarding

Credit Card Solicitation at Institutions of

Higher Education, 1999 to 2001

Page 64 GAO-01-773 College Student Credit Cards

State Year introduced Status Summary of law, bill or resolution

Agriculture,

4/24/01,

Indefinitely

postponed

3. Requires the institutions to report annually any funds they

receive or any percentage they receive from the distribution of

credit cards to students or any percentage from the use of credit

cards bearing the school logo as well as how such funds were

expended during the previous fiscal year to the Joint Oversight

Committee on education.

4. Prohibits credit card issuers offering gifts to students as an

incentive for applying for a credit card.

5. Prohibits the institutions from using state or federal revenue to

offset or replace any funding from credit card issuers that is lost

due to the provisions of this bill.

6. Requires the institutions to use revenues received from the

credit card issuer to fund any increase in state expenditures

resulting from the implementation of this bill.

House Bill 538

Senate Bill 436

February 11,

1999 General

Assembly

adjourned

6/28/00, No

carryover

Proposed:

1. Prohibits institutions of higher education from selling or

distributing student lists to credit card issuers.

2. Prohibits credit card issuers from recruiting potential student

cardholders or customers on campus, through student

organizations or through alumni groups.

3. Prohibits offers of gifts or any promotional incentives to students

to entice such students to apply for credit cards or any other

instruments of credit.

House Bill 2958;

Senate Bill 2592

February 2000

January 2000

General

Assembly

adjourned

6/28/00, no

carryover.

Proposed:

Requires any institution of University of Tennessee or state board

of regents system that receives funds from credit card

distributions to students or the use of school logos to report

amount of funds received and how such funds were used to joint

oversight committee on education.

House Resolution 15 February 8, 2001 To House

Committee on

Education,

2/11/01

Proposed:

Creates a Special House Committee to study bankruptcy in

Tennessee, including bankruptcy rates, particularly among young

adults, bankruptcy laws, credit marketing regulation.

22. Virginia

House Bill 1451

January 2000 No action by

committee

To be continued

to 2001

Proposed:

Every educational institution shall have the power to:

1. Establish policies regulating the direct solicitation, marketing,

and distribution of credit cards to students on the institution’s

campus property and grounds.

2. Requires that the policies shall not restrict the right of credit card

vendors, financial institutions, or other commercial consumer

credit companies to contact students by mail, telephone or

electronic means.

House Joint Resolution

Number 735,

Amendment in the

Nature of a Substitute

Proposed by the

Senate

Committee on

Rules on

February 19,

1999

Adopted,

February 25,

1999

Resolved:

The State Corporation Commission, the Department of Agriculture

and Consumer Services, the State Council of Higher Education, and

the Virginia Cooperative Extension Service are requested to develop

a plan for providing consumer credit information to college students,

and for monitoring complaints regarding unsolicited offers of credit,

and credit cards and incentives. The plan shall address providing

information to college students and their parents, and to institutions

of higher education, upon request, regarding: (1) the rights of

consumers, including the right to make inquiries of institutions and
Appendix II: State Legislation Regarding

Credit Card Solicitation at Institutions of

Higher Education, 1999 to 2001

Page 65 GAO-01-773 College Student Credit Cards

State Year introduced Status Summary of law, bill or resolution

credit card companies; (2) the maintenance of good credit; (3) how

to obtain and interpret credit history information; (4) how to file a

consumer complaint. The plan shall also establish procedures and

determine the cost of collecting and providing data regarding

consumer complaints by college students about credit offers and

credit card companies. In addition, the plan shall address ways to

disseminate the consumer information on campus in the least

intrusive and most cost-effective manner.

Senate Joint Resolution

Number 421

January 21, 1999 Adopted

February 17,

1999

Resolved:

That institutions of higher education be requested to provide

consumer credit information to college students and their parents.

Along with other notices, bills, and information provided students and

their parents during freshman orientation, institutions of higher

education are requested to include consumer awareness information

regarding good credit, sound money management, the potential

impact of credit card debt on personal finances, future employment,

obtaining student loans to complete undergraduate, graduate, and

professional school, as well as reputable resources which offer

consumer credit information or counseling without charge or for a

modest fee. Institutions are also requested and encouraged to

disseminate this information on campus in a manner deemed

appropriate by the institution.

23. Washington

Senate Bill 5476

(Substitute)

February 16,

2001

No action by

committee

March 2001

Proposed:

1. Requires that credit cards not be issued to persons under 21

without obtaining a written application that includes a statement

by the applicant listing all existing available credit; that available

credit must be listed by source and amount; and the applicant

qualifies for credit under reasonable and prudent industry

standard.

2. Failure of credit card companies to comply with the

requirements constitutes an affirmative defense to the collection

of debt incurred by using the card or credit issued.

3. Prohibits credit card issuers from offering gifts for the completion

of credit card applications, except for educational material on

the responsible use of credit.

4. Prohibits colleges and universities from selling or transferring

lists of student names and addresses to credit card issuers.

Senate Bill 6258 January 11, 2000 To Senate

Committee on

Commerce,

Trade, Housing

and Financial

Institutions,

1/12/00

Proposed:

1. Requires credit card issuers that conduct a credit card

marketing activity on campus of any institution of higher

education in Washington to provide to students and their

families on that campus a program of education on responsible

use of credit.

2. Prohibits the issuance of a credit card to students enrolled in a

college or university located in Washington unless the

application submitted by a student includes a certificate or other

reasonable proof that the applicant has attended the education

program.

3. Prohibits credit card issuers from offering gifts in exchange for

the completion of a credit card application as part of a marketing

program conducted on any campus of a college or university

located in Washington.
Appendix II: State Legislation Regarding

Credit Card Solicitation at Institutions of

Higher Education, 1999 to 2001

Page 66 GAO-01-773 College Student Credit Cards

State Year introduced Status Summary of law, bill or resolution

4. Provides civil penalties for violation of these provisions.

24. West Virginia

Senate Bill 588

(substituted)

March 26, 2001 Passed Senate

4/5/01, to House

Committee on

Judiciary 4/6/01

Proposed:

1. Every person who solicits applications for the issuance of credit

cards on the property of any institution of higher education must

first register with the institution before soliciting students on

campus. Every registration shall include an agreement that the

credit card issuer will not provide an application to a student

unless the student has signed a credit card education

information sheet designed by the governing board of the

institution.

2. No person who solicits applications for credit cards may offer

any gifts or any other promotional incentives to students while

on the property of an institution of higher education.

3. Every institution that permits the solicitation of credit card

applications to its students shall include within its freshman

orientation program a seminar regarding credit and related

topics.

4. Unless a student’s parent or guardian has agreed in writing to

be liable for credit card debts of the student, no person may

initiate a debt collection action against the parent or guardian

regarding any credit card debt incurred by the student if the

student applied for the credit card while enrolled at an institution

of higher education and the application was solicited by the

company on the property of the institution.

5. No person may purchase or otherwise obtain from an institution

of higher education specified information about the students that

the institution of higher education, including student lists, for the

purpose of soliciting applications for credit cards.

6. No institution of higher education may enter into any agreement

for the direct merchandising of credit cards to its students.

7. A person who violates any of the provisions is guilty of a

misdemeanor and shall be fined an amount not to exceed $500.

Senate Bill 538 February 15,

1999

Referred to

committee

2/15/99;

Legislature

Adjourned

3/20/99, No

carryover.

Proposed:

1. No action by a creditor for a debt owed on a credit card

transaction by a person who is a full-time student at any college

or university located in this state, may be brought while that

person is a full-time student. The action may not be brought until

6 months have elapsed from the time the person graduated or

ceased to be a full-time student.

2. Judgments against full-time students for debts owed on a credit

card transaction may not be enforced while that person is a fulltime student. A full-time student may not be threatened with, or

denied the right to graduate because of credit card

indebtedness or a judgment based on credit card indebtedness. a

A study request is approved when no more than one-third of the members of the Louisiana

House of Representatives filed a written objection to the study request.

b

A memorial in New Mexico represents a request that a voluntary action be taken and does

not require passage in both state houses to be effective.

Source: GAO analysis.
Appendix III: Additional Studies of College

Students and Credit Cards

Page 67 GAO-01-773 College Student Credit Cards

To better understand how students acquire and use credit cards, we

conducted a literature search. In addition to the studies we used in our

report, we found three studies that reported survey results on how

students acquire credit cards, how they use them, and how much debt they

incur.1

 We did not include the results in our report because the survey

methodology of these studies did not employ random sampling techniques

that would allow us to draw inferences about the student population as a

whole or even about a specific subset of students. For example, the

sample size may have been too small, or the observations may have come

from populations that were not random, such as students at a particular

college or members of a particular organization. We briefly describe these

studies below.

In 1998, the U.S. Public Interest Research Group2

 (PIRG) published a

survey of 1,260 undergraduate students.3

 PIRG student volunteers on

campus asked students with credit cards to fill out surveys in student

centers. In addition, over the summer a survey was randomly distributed

to students working in PIRG offices around the country. Among the

findings PIRG reported were:

• Students responsible for their own credit cards who obtained cards at

campus tables had more cards (2.6) and higher unpaid balances ($1,039)

than those who did not (2.1 and $854).

• Among students responsible for their own credit cards, more of those who

obtained cards at campus tables reported carrying unpaid balances (42

percent) than those who did not (35 percent).

• Most students surveyed (69 percent) obtained credit cards in their names,

and the others (31 percent) said their parents paid their primary bills or

 1

Two other studies that survey credit card usage did not meet the needs of this report. The

Federal Reserve System, with the cooperation of the U.S. Department of the Treasury,

sponsors an extensive survey of family finances every 3 years. The latest survey, completed

in 1998, provided comprehensive statistics on 4,309 families, including credit card usage

and debt, but it did not distinguish college students from other credit card users. See

Arthur Kennickell, et. al., “Recent Changes in U.S. Family Finances: Results from the 1998

Survey of Consumer Finances,” Federal Reserve Bulletin, Vol. 86, Jan. 2000. Also, the

American Bankers Association Bank Card Industry Survey Report: Eighth Edition

(Washington, D.C.,1999) compiles statistics from card issuers but does not address issues

of student credit card use.

2

The U.S. PIRG is the national lobbying office for the state Public Interest Research

Groups. PIRGs are statewide, nonpartisan, nonprofit consumer and environmental

watchdogs with members in communities and on college campuses around the country.

3

“The Campus Credit Card Trap,” Sept. 1998. See www.pirg.org/student/consumer/credit98.

Appendix III: Additional Studies of College

Students and Credit Cards
Appendix III: Additional Studies of College

Students and Credit Cards

Page 68 GAO-01-773 College Student Credit Cards

were cosigners on at least one of their cards. Of those students who

obtained cards in their names, only 15 percent reported holding a full-time

job when they applied.

In 1999, Robert D. Manning of Georgetown University reported the results

of a study of students from four universities in the Washington, D.C. area.4

The report covered more than 350 interviews and 400 surveys; some of the

surveys were from students walking past one campus building, and others

were given to students taking an Introduction to Sociology class. The

study, which reported results by school, found that 91 to 96 percent of the

students had credit cards and that 53 percent had revolving credit card

debt.

In the spring of 1998, the Boynton Health Service of the University of

Minnesota, Twin Cities Campus, conducted a mail survey of 1,000

undergraduate and graduate University of Minnesota students on a variety

of subjects, including credit cards. About 57 percent of the recipients

responded to the survey. Most respondents had at least one credit card.

Nearly 25 percent of respondents had credit card debt in excess of $1,000.

The researchers found that students who used alcohol and tobacco and

who worked more than 40 hours a week had more credit card debt than

those who did not.

 4

“Credit Cards on Campus: Social Consequences of Student Debt,” and “Credit Cards on

Campus: Current Trends and Informational Deficiencies.” See www.creditcardnation.com.
Appendix IV: Card Issuer Code of Conduct

Page 69 GAO-01-773 College Student Credit Cards

Appendix IV: Card Issuer Code of Conduct
Appendix IV: Card Issuer Code of Conduct

Page 70 GAO-01-773 College Student Credit Cards

Source: MasterCard International.
Appendix V: GAO Letter to Card Issuers

Page 71 GAO-01-773 College Student Credit Cards

Appendix V: GAO Letter to Card Issuers
Appendix V: GAO Letter to Card Issuers

Page 72 GAO-01-773 College Student Credit Cards
Appendix VI: GAO Contacts and

Staff Acknowledgements

Page 73 GAO-01-773 College Student Credit Cards

Davi M. D’Agostino, (202) 512-8678

M. Katie Harris, (202) 512-8415

In addition to those named above, Patrick Dynes, Janet Fong, Elizabeth

Olivarez, and Robert Pollard made key contributions to this report.

Appendix VI: GAO Contacts and Staff

Acknowledgements

GAO Contacts

Acknowledgements

(233654)

The first copy of each GAO report is free. Additional copies of reports are

$2 each. A check or money order should be made out to the

Superintendent of Documents. VISA and MasterCard credit cards are also

accepted.

Orders for 100 or more copies to be mailed to a single address are

discounted 25 percent.

Orders by mail:

U.S. General Accounting Office

P.O. Box 37050

Washington, DC 20013

Orders by visiting:

Room 1100

700 4th St., NW (corner of 4th and G Sts. NW)

Washington, DC 20013

Orders by phone:

(202) 512-6000

fax: (202) 512-6061

TDD (202) 512-2537

Each day, GAO issues a list of newly available reports and testimony. To

receive facsimile copies of the daily list or any list from the past 30 days,

please call (202) 512-6000 using a touchtone phone. A recorded menu will

provide information on how to obtain these lists.

Orders by Internet

For information on how to access GAO reports on the Internet, send an email message with “info” in the body to:

Info@www.gao.gov

or visit GAO’s World Wide Web home page at:

http://www.gao.gov

Contact one:

• Web site: http://www.gao.gov/fraudnet/fraudnet.htm

• E-mail: fraudnet@gao.gov

• 1-800-424-5454 (automated answering system)

Ordering Information

To Report Fraud,

Waste, and Abuse in

Federal Programs