by Joseph Kenny | 01/30/09

A very common, albeit not well known, practice for credit card companies is making deals with colleges.

These deals provide a profit for the colleges, which is important in times when public funding is very limited and declining. However, many people are critical of the terms involved in the contracts between colleges and lenders, especially the practice of providing lists of student information in return for financial gain.

In addition, many credit card companies are allowed to advertise and market during sporting events, providing the novelty of free items to naïve students in exchange for signing up for a credit card.

Although credit cards and loans are necessary for many college students to get by and buy things they need like groceries, relying on credit cards is a bad habit to get into. Relying on credit cards for buying things they need causes many students to graduate from college already in thousands of dollars of credit card debt.

Having already accrued debts in college and with fewer jobs available in these difficult financial times, many people claim these deals are encouraging students to get deep into debt and learn poor financial practices.

Conversely, colleges claim the revenue provided in these deals is vital to having proper funding and necessary for providing much needed scholarships for students. They colleges claim the credit card issuers have programs available to educate the students on financial responsibility and the creditors also give college students much more restricted terms on loans.

There are safeguards like a cap on the credit lines for students, usually around $2,500. The companies say they wish to establish a good base for a long term financial relationship with students.

In the end, there are two sides to the story, and both sides provide good arguments for their actions. Both sides agree that students should be educated on the dangers of using credit in an irresponsible manner and many schools have new policies stopping the sharing of the student information with the credit card companies.

Since it seems the practice isn't going away anytime soon, this presents a worthwhile opportunity for students to learn about debt responsibility in a firsthand way.