THE DIRTY SECRETS OF CAMPUS CREDIT CARDS

Issued under affinity contracts, they represent sweetheart deals between card companies and the colleges. It's the students who pay the price.

IT WAS THREE YEARS AGO and Irene Leech still remembers the shock clearly. An associate professor at Virginia Tech who specializes in consumer affairs, she read the terms of the credit card that her school, together with JP Morgan Chase, was marketing to students, alumni, and staff.

Behind the card's shiny surface, featuring the football stadium at sunset, the so-called "affinity" card offered some of the most unfavorable terms around for card users. Among other things, the card had what's known as "double-cycle" billing, where interest is calculated over two months instead of the typical one, resulting in higher finance charges. "I was shocked," she says. The experience convinced her to take a stand.

She has been speaking out against the conflicts of interest that universities face when they strike business agreements with credit card companies.

CHASE ULTIMATELY DROPPED DOUBLE-CYCLE BILLING on the Virginia Tech card, as it did for all cards earlier this year. But Leech warns that schools that get money from credit card companies through affinity contracts or other marketing agreements face intractable problems, in which the school's financial interests are in direct conflict with those of students and alumni. "Students assume that if the university has an affinity contract with a bank to offer a credit card, the university will surely look after them," she says. "But these contracts are really money-makers for the school, and not about services to the students."

Million Dollar Relationships

Leech isn't just taking on Virginia Tech, which takes in seven figures from the Chase deal. Nearly every major university in the country has a multi-million-dollar affinity relationship with a credit card company. The deals can be worth nearly $20 million to a single university. Schools, especially public universities supported by state revenues, are coming under increasing financial pressure to generate new revenue these days, and deals with credit card companies can provide a steady stream of income. And in most cases, the worse the card terms are for students and alumni, the more profitable they are for the schools.