Credit Crunch: “The Sandwich Loophole”

How some aggressive marketers use food to lure college students

Like most any other warm-blooded, empty-pocketed college student, Brett Thurman enjoys a sandwich; especially when the price is right.

Not too long ago, Thurman said he was handed a simple coupon while on the University of Illinois-Chicago campus. It had no fine print on it, just the words,"free sandwich."

"So you get the coupon for the free sub, and you're like, "Great! Another day I don't have to buy lunch!" Thurman remembered. "We took it up to the guy at the counter and he said, "Oh, you have to go see that gentleman over there."

"Over there" was the corner of the shop, and "that gentleman" worked for a credit card company.

In order to get the free food, Thurman had to hand over his personal information on a credit card application.

"They're like, "Don't worry. It's not going to impact your credit. It's just so we can offer you a credit card.' And that wasn't the case, obviously," Thurman said.

Soliciting by credit companies to students isn't allowed on the UIC campus. In this case, the marketing took students two blocks off campus to a restaurant.

Illinois State Treasurer Alexi Giannoulias has a name for it: "the sandwich loophole," and it's one he'd like to close.

"You're a college kid trying to make ends meet," Giannoulias explained. "Someone offers you a free pizza or free poncho or free sweater. You know, it takes three seconds to sign it. A lot of these students are doing it without understanding what they're getting themselves into."

A bill recently introduced to the Illinois would:

  • Ban campus giveaways for signing up for a credit card;
  • prohibit schools from selling student names and personal information to credit card lenders; and
  • force schools to disclose market agreements. Schools typically receive big money to establish ties with a specific card issuer.

"Mom and Dad sure didn't talk to them about money and how to manage it," said credit counself Cate Williams, who visits campuses across the state.

Williams said the real problem isn't the marketing, but a student's ina bility to walk away from it.

"Aggressive marketing at a time when young people are making more independent decisions, not as well-informed," Williams said. "It really creates the recipe for credit disasters."

A recent study of 1,500 college students nationwise by the public interest research group found that college senior responsible for their own cards revolve more than $2,600 in debt. About 25 percent reported paying at least one late fee, and 15 percent said they had gone over their card limit at least once.

"We're not trying to get credit cards off college campuses. We just want to make sure it's done responsibly," Giannoulias said.

Supporters of the proposed law hope it would limit the tactics used on the front line of university campuses. Students, however, will still need to draw their own line when it comes to these offers, free lunch or otherwise.

"You know, I'm not really interested in a credit card. I'm more interested in a free sub," Thurman said.

The proposed Illinois law, now in committee, would be the widest-reaching state law it its kind. Congress is also considering stricter rules, but the American Bankers Association opposes more restrictions, claiming that most college students use their cards responsibly. About 65 percent, they said, pay their bills in full every month. That, they point out, is higher than the general adult population.

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