OU cashes in $8.8M from credit-card agreements

Editor’s note: Nicholas Harrison is a former Daily opinion columnist who became a news reporter this semester. As a columnist, he wrote about this subject in a previous semester. This piece is fact based — not opinion — and has been edited to assure its objectivity.

When OU agreed to provide student information to credit-card companies five years ago, university administration intended to increase student activities funding with the program’s revenue.

Of the $8.8 million received since 2007, none of the money has gone to student activities, according to university cash-flow statements.

OU entered into two 10-year credit-card affinity agreements with Bank of America and Mid-First Bank on Dec. 5, 2006, at a regular meeting of the regents.

These agreements are contracts made between banks and organizations like OU to provide increased access to credit cards for students, faculty, staff and alumni. Within these arrangements, the organizations receive commissions and royalties on all sales and new members acquired, according to the contract.

Revenues have gone to University and Alumni Affairs, the Athletic Department, the Arezzo Monastery Project, and other “institutional commitments,” with $6 million devoted to the Fred Jones Museum of Art in the past year, according to the cash-flow statements.

Some of the money the museum received went toward exhibits and programming aimed at students, university spokesman Chris Shilling said.

“In the past few months, the art museum has opened exhibits exclusively for thousands of students and created programs that support art and art education,” Shilling said.

Shilling did not disclose the nature of the other institutional commitments.

OU was guaranteed $12.1 million over 10 years, according to the terms of the agreement made by the regents in 2006.

Since the contract took effect May 1, 2007, the university also has recorded almost $700,000 in interest earnings on the proceeds under these agreements with another $1 million payment due May 1, according to an open records request.

The first credit-card affinity agreement was developed as a source of additional revenue for student activities, and OU Business Affairs later accepted bids from national banks, said Richard Hall, former OU Student Affairs vice president.

The original program had controls built into the application process, including a credit limit of less than $500 for first-time borrowers and parental approval for students under 18, said Hall, who developed the original agreement.

“At the time, there was less concern for student over-borrowing and more concern for opportunities for students to begin to establish their own credit history,” he said.

There are no similar restrictions in the university’s current affinity agreement with Bank of America.

“The monetary gains for the university, by my recollection, were sizeable and there were likely more decisions driven by a substantial new revenue stream than by worry over student debt load,” Hall said.

To prepare students who were hoping to use credit cards for the first time, OU offers educational outlets to help prevent credit-card abuse and poor money management, Shilling said.

“Credit cards provide a variety of benefits and associated responsibilities for college-student borrowers,” Shilling said. “Credit cards are widely available in our society, and we believe that most of our students will use credit for the benefits it may provide them.”

Colleges and universities are prohibited from selling student information to credit-card companies, according to state law.

OU complies with this law, Shilling said.

However, the university agreed with Bank of America to provide updated contact lists containing the last-known mailing address and phone numbers of alumni, donors, faculty, staff and “other potential participants,” according to the terms of the affinity agreement. These other potential participants have always included students, Shilling said.

In return for these contact lists and other forms of support and assistance, the university receives $1 for each new student credit-card account opened, $1 for each annual fee paid on student credit-card accounts, 0.40 percent on all retail transaction volume for all student credit-card accounts and other royalties.

Student information was not being sold because the university is required by law to provide student-directory information to anyone who tenders an open records request, unless students elect to withhold their information, Shilling said.

However, OU treats this information as confidential, according to the contract. Neither the university nor the bank may provide these contact lists to other parties unless forced to do so.

When an open records request is filed, the university has agreed to consult with the bank and the OU Foundation “on the advisability of taking legally available steps to resist or narrow” requests for this information submitted under the Oklahoma Open Records Act, according to the contract.

The university does not disclose its agreement with Bank of America in its policy regarding the release of student information on its website. It also does not give students the option to simply withhold their information from being shared for commercial purposes.

Students must fill out a request to place a hold on all of their directory information and there is a warning that reads, “If anyone calls or contacts the University, no information will be released verifying your attendance, withdrawal or graduation from the University. This information will be released only upon your written authorization. Even if you call personally, none of this information can be provided without your written release.”

Affinity agreements were criticized shortly after the suicides of two Oklahoma college students were featured in a 2007 independent feature-length documentary film, “Maxed Out.”

Sean Moyer was a National Merit scholar from Norman and an OU transfer student who was headed to law school when he committed suicide because of credit-card debt in 1988 at age 22. Mitzi Pool was an 18-year-old freshman at the University of Central Oklahoma who committed suicide in 1997 in her dorm room with credit card bills scattered across her bed.

As a result of these suicides, UCO no longer allows credit cards to be marketed on its campus. It also has incorporated a personal-finance course as an elective in its general-education requirements.

UCO schedules 10 to 20 sections of its personal-finance course every semester and encourages students to learn about these issues, Randal Ice, Personal Finance Department chairman, said.

“I can’t speak on any credit-card affinity programs, but here at UCO we take financial literacy and personal financial education very seriously,” Ice said.

OU has taken neither of these steps.

A bill that would have banned credit cards from state college and university campuses was introduced in 2008. However, the bill was curtailed when OU protested the measure because of its contract with Bank of America, according to several media reports.

The State Regents formed a task force to study the issue of financial literacy shortly after the bill was introduced. After studying the issue for more than a year, the group released a 14-page document in September recommending no changes to the state’s general-education requirements.

OU’s chapter of Students for Democratic Society conducted a similar study and released a 172-page document in November 2009 that described how a personal-finance course might be incorporated into the general-education requirements as an elective.

On its website, the society noted, “This needs to stop. When students agree to allow the university to share their enrollment information and other information to potential employers or various honor societies, they do not ever intend that to be consent to have their information sold to banks and credit card companies without their knowledge.”

Nicholas Harrison

Nicholas is a former staff member of The Oklahoma Daily who worked as Opinion Columnist and News Reporter.