Attorney General Cuomo Announces Landmark Agreement With Suny To Protect Students From Deceptive And Unfair Credit Card Marketing
OLD WESTBURY, N.Y. (September 7, 2010) – Attorney General Andrew M. Cuomo today announced a landmark agreement in which the State University of New York (“SUNY”) will safeguard students from deceptive and unfair credit card marketing by adopting Cuomo’s “Student Credit Card Reforms for Colleges and Universities.” The reforms provide a roadmap for how schools can protect college students from falling victim to problematic credit card marketing practices. As his statewide investigation into student credit card marketing continues, Cuomo called on all New York colleges and universities to adopt the reforms.
Cuomo’s reforms are based on his ongoing investigation into student credit card marketing, which has revealed troubling practices that have contributed to the crushing credit card debt faced by many students. The reforms outline steps schools should take to monitor and limit marketing to college students and commit the schools to providing financial literacy programs. SUNY, which is the first to adopt the reforms in the nation, will implement the policies at each of its 64 campuses.
“In these difficult economic times, college students are acquiring enormous credit card debt that may burden them for decades to come,” said Attorney General Cuomo. “To make matters worse, they are being targeted by credit card companies at their colleges. By agreeing to adopt these reforms, SUNY has demonstrated its commitment to protecting students from unfair credit card marketing at all of its campuses. I commend SUNY for being at the vanguard of reform and I urge other colleges and universities to follow their lead.”
Attorney General Cuomo’s “Student Credit Card Reforms for Colleges and Universities” include:
- Schools must offer financial literacy programs to educate students on student loans, credit cards, and other commonly used financial products.
- Schools must not share students’ personal information with credit card companies unless the school has obtained students’ prior authorization.
- If a school decides to enter an exclusive agreement with a credit card company that makes credit cards available to students, it must select a credit card based on the best interests of students.
- Schools must limit any on-campus credit card marketing to appropriate times and locations and must monitor all credit card offers promoted on campus.
- Schools must never enter into any agreement with a credit card company in which the school earns a percentage of finance charges imposed on students. If a school currently has such an agreement, it must stop accepting payments from it immediately.
More information for students, parents, and colleges about student credit card marketing practices and Cuomo’s reforms can be found at the Attorney General’s Web site http://www.ag.ny.gov
The Attorney General’s investigation is ongoing.
Chancellor of the State University of New York Nancy L. Zimpher said, “At SUNY, we want to make sure that all of our students are prepared with the financial education they need and have the strongest safeguards against financial danger. In order to best protect our 465,000 students at each of our 64 campuses across the state, I am proud to commit to Attorney General Cuomo’s groundbreaking reforms. I look forward to SUNY’s continued work with Attorney General Cuomo on behalf of New York’s students.”
Dr. Robert D. Manning, author of Credit Card Nation, said, “Crippling debt at an early age can devastate a person’s academic career, credit worthiness, future job and partner prospects, as well as mental health. These groundbreaking reforms will have a transformative effect by promoting student financial literacy, responsible consumption, and academic performance. Attorney General Cuomo’s comprehensive reforms put the best interests of students and their families before the bottom line.”
According to a 2009 survey conducted by Sallie Mae, eighty-four percent of college students had at least one credit card and half of college students had four or more cards. The average college student graduates with nearly $4,100 in credit card debt, on top of an average of $20,000 in loans for students at four-year colleges. This combined debt burden can be overwhelming for new graduates, particularly as they face the uncertainties of today’s difficult economic climate. Credit card debt has been found to slow students’ progress toward obtaining a college degree, as some students become forced to drop out of college and obtain full-time employment to meet their debt obligations. High-interest credit card debt limits graduates’ career choices and threatens students’ employment prospects, since many employers check applicants’ credit scores during the hiring process.
Last week, Attorney General Cuomo sent letters to the approximately 300 colleges and universities in New York calling on the schools to submit any exclusive contracts they currently have with credit and debit card companies for an evaluation by his office. The Attorney General’s office will review the contracts for any problematic practices that put students at risk.
Attorney General Cuomo’s examination of deceptive credit card marketing practices that target students builds on his nationwide investigation of the student loan industry. Cuomo’s student loan investigation, which began in 2007, resulted in massive reforms that prohibited the largest student lenders in the country, as well as a number of schools, from engaging in conflicted and deceptive lending practices. The investigation resulted in settlements with the largest student lenders in the country and 28 schools, many of which contributed to a multi-million dollar fund to educate students and families nationwide on the student lending process. The investigation also resulted in the return of over $3.5 million dollars to students and their families. Furthermore, Cuomo’s Code of Conduct for the student loan industry was codified into New York State law as the Student Lending Accountability, Transparency, and Enforcement (SLATE) Act of 2007 and became national law as the federal Higher Education Opportunity Act of 2008.
This investigation is being led by Special Deputy Attorney General for Consumer Frauds & Protection Joy Feigenbaum and is being handled by Special Counsel Carolyn Fast and Assistant Attorney General Brian Montgomery, under the direction of Executive Deputy Attorney General for Economic Justice Maria Vullo and Deputy Attorney General for Economic Justice Michael Berlin.