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Fewer Frisbees on Tennessee Campuses This Fall

posted by Katie Porter

Every fall as the Credit Slips bloggers prepare to begin teaching, we are treated to the sight of tables, tents, and marketing literature aimed at marketing credit cards to college students. This year, those familiar signs won't be appearing on the campuses of the University of Tennessee system. On May 21, 2008, Tennessee enacted a law prohibiting credit card issuers from recruiting students on campus or through university facilities or student organizations. (There is an exception for "days when there are athletic events" so presumably home football games retain their usefulness for credit card issuers). The bill also requires the University of Tennessee institutions that receives funds from student credit cards or from the use of the school name or logo on credit cards to disclose the amount of money received and how the money was used.

Calls for restricting credit card marketing to students are nothing new (see here and here and here) but I think this is the first law to be enacted that absolutely bans campus marketing. I'm confident the credit industry will challenge the bill, probably on preemption grounds, arguing that as the state of Tennessee lacks authority to regulate national banks. I think that argument should fail. The state isn't banning credit cards as a matter of general commerce; the legislature is acting in its role as overseer of the state's educational institutions.  If an institution itself (Rochester Institute of Technology, University of New Mexico) can ban or sharply limit the solicitation of students for credit cards, I think a state legislature can enact the same prohibition for the campuses that it controls.


I know this is off sub. but Liz Weston cited you (katie) today on msn money.

Arkansas has already done, but if they do allow it at Athletic events (not necessarily on campus) the School has to have a credit seminar within Freshman Orientation.

See Ark. Code Ann. sec. 4-104-201, et seq.

Individual universities are also imposing such limits, but their power ends at the edge of the campus.
Last week, membbers of the House Subcommittee on Financial Institutions and Consumer Credit held a hearing on student credit card marketing practices. One of those testifying was Brett Thurman, president of the Undergraduate Student Government at the University of Illinois at Chicago.
He testified about the free Subway sub giveaway, in exchange for completing a Discover card application) You can find his testimony here: http://www.house.gov/apps/list/hearing/financialsvcs_dem/hr0626084.shtml
Makes for good reading. Because the university is an urban university, stretched out so that you have to walk through town and shops to get from class to class, it goes from no-soliciting to lots-of-soliciting and back again.

What’s messed up is that my sister who had no job received a credit card before I did. She was a student at our local University on a track scholarship. At that time I was working full time making $15 per hour. When I first applied they would only give a $200.00 limit. She, with no job got a 2k limit! It has been hell to pay for her but with the help of mom and dad (what the credit card co's expected) she is finally out of debt…… 4 years after graduation! The penalties and interest ate her lunch! She had no job and the scholarship only paid enough for tuition and some books... well all of her books. Mom and Dad helped with the rest so she had no student loans.

Limits of credit card marketing on campus have been restricted in West Virginia since 2003. The text of the law is as follows:

WV Code §18B-14-10. Credit card solicitation on college campuses; regulation of credit card marketing.

(a) Definitions. -- For the purposes of this section, the following terms have the following meanings:
(1) "College campus" includes the premises and grounds of an institution of higher education;
(2) "Credit card debt education brochure" means the information developed by a college or university, by a registered nonprofit corporation or by other sources as identified and approved by the institution of higher education, that details the appropriate use, benefits and risks of incurring debt through the use of credit cards;
(3) "Credit card marketer" includes a person, corporation, financial institution or business entity that promotes, offers or accepts applications for a credit card;
(4) "Institution of higher education" means any of the following:
(i) A community college or technical college as defined in subsection (e), section two, article one of this chapter; and
(ii) Bluefield state college, Concord college, Glenville state college, Fairmont state college, Marshall university, West Virginia northern community college, West Liberty state college, Potomac state college of West Virginia university, Shepherd college, West Virginia university institute of technology, southern West Virginia community institute of technology, West Virginia university at Parkersburg, West Virginia school of osteopathic medicine, West Virginia state college, West Virginia university and all branch campuses of these institutions of higher education; and
(5) "Student" means a person who is at least eighteen years of age and who attends an institution of higher education whether on a full-time or part-time basis.
(b) The governing boards of each institution shall propose rules in accordance with the rule adopted by the higher education policy commission pursuant to the provisions of section six, article one of this chapter no later than the first day of July, two thousand three, to regulate the marketing practices used on campuses by credit card companies. In proposing these rules, the governing boards shall consider the following requirements:
(1) Registering on-campus credit card marketers;
(2) Limiting credit card marketers to specific institutional campus sites designated by the president or administrative head of the institution or his or her designee;
(3) Prohibiting credit card marketers from offering tangible gifts to students in exchange for completing a credit card application;
(4) Requiring that no application for the extension of debt through a credit card may be made available to a student unless the application is accompanied by a credit card debt education brochure;
(5) Whether or not to use or the appropriate use of student lists for the purpose of soliciting applications for credit cards; and
(6) Developing a credit card debt education presentation to be incorporated into orientation programs offered to new students.
(c) Unless a student's parent or guardian has agreed in writing to be liable as a cosigner 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.

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