HIGHER ED | DAILY REPORT

State colleges, alu m n i gr ou ps r eap $ 6 .6 M in cr edit car d r oyalties

September 2, 2011 | Erica Perez California colleges, alumni associations and university foundations made $6.6 million in royalties last year from agreements with college credit card issuers, with more than 3,000 new accounts opened, according to a July report from the Federal Reserve Board. Under the agreements, banks typically get exclusive rights to market credit cards to university students and alumni, and they pay royalties to the universities or related organizations based on the number of new credit card accounts opened. Andres Rueda/Flickr The annual report shows declines in revenues from these branded credit cards since last year. Consumer advocates say that decline is partly due to the federal Credit Card Accountability, Responsibility and Disclosure Act of 2009, which increased transparency in the contracts and limited the use of free gifts in on-campus credit card marketing. The law requires credit card issuers to annually submit to the board a copy of any college credit card agreement with an institution of higher education, alumni organization or affiliated foundation. The board maintains a database of the contracts. "Colleges have to think about these contracts and the reputational risk of

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collecting money from credit card companies and allowing access to their undergraduates, who they have some responsibility for," said Ed Mierzwinski, director of the consumer program for the U.S. Public Interest Research Groups. Still, while the new federal law is a major step toward protecting students, regulators could do more to make the more than 1,000 credit card agreements easier to analyze, Mierzwinski said.

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In California, contracts with USC and UC Berkeley's Cal Alumni Association were among the 10 agreements with the largest payments by credit card issuers. The Penn State Alumni Association's contract was the most lucrative in the nation, generating $4.3 million. The California Alumni Association received $1.4 million in 2010 from its

L ike our cont ent ? H elp us do m or e.

agreement [PDF] with FIA Card Services, a subsidiary of Bank of America Corp. The alumni association gets $1 for every credit card account opened, plus a percentage of transaction dollar volume. USC has a similar royalty arrangement, and its contract [PDF] with FIA Card Services says that within 30 days of a bank request, the university must give the bank mailing lists for alumni, faculty, staff, fans, ticket holders, donors, undergraduates and graduate students. The lists include postal addresses, telephone numbers and e-mail addresses.

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Even before the federal Credit CARD Act passed, California enacted legislation in 2007 that pushed for more transparency in the contracts and limited on-campus marketing. Preeti Vissa, community reinvestment director for the Berkeley-based Greenlining Institute, which sponsored the California law, said the federal law went further to protect California students. Still, Vissa said, "it's really quite a pity that our universities have had to resort to these predatory lenders to get revenue." Both Mierzwinski and Vissa have high hopes for the newly formed Consumer Financial Protection Bureau, which will be enforcing the Credit CARD Act. While the Federal Reserve Board tallies the number of new accounts and payments to universities and related organizations and also posts the contracts online, it does little to analyze the contracts or provide recommendations for improvement, Mierzwinski said. He hopes the Consumer Financial Protection Bureau will do that. The way the contracts are posted, it's difficult to compare royalty arrangements, mailing list agreements or marketing practices from one university or alumni group to the next. The data also doesn't indicate how many cardholders are undergraduates, as opposed to alumni, faculty or staff. "You make the most money on alumni; they use the cards the most," Mierzwinski said. "But undergraduates are the holy grail because the chances are, youre getting the first card into their wallet, which will be one that they will keep."

Here's a look at royalty payments and credit card accounts by university or related organization in California:

INSTITUTION OR ORGANIZATION

CITY

CREDIT CARD ISSUER

TOTAL OPEN ACCOUNTS AS OF 12/31/2010

PAYMENTS BY ISSUER IN 2010

NEW ACCOUNTS OPENED IN 2010

University of Southern California

Los Angeles

FIA Card Services, N.A.

20,580

$1,508,625.00

536

California Alumni Association (UC Berkeley) and the Regents of the University of California Leland Stanford Junior University by Stanford Alumni Association and Stanford Department of Athletics, Physical Education and Recreation UCLA Alumni Association

Berkeley

FIA Card Services, N.A.

19,412

$1,353,225.00

531

Stanford

FIA Card Services, N.A.

16,079

$1,000,000.00

178

Los Angeles

FIA Card Services, N.A.

26,505

$733,318.00

440

California State University, Long Beach, Alumni Association California State University, Fresno, Alumni Association San Jose State University Alumni Association University of CaliforniaRiverside Alumni Association California Aggie Alumni Association

Long Beach

FIA Card Services, N.A.

7,122

$200,000.00

45

Fresno

FIA Card Services, N.A.

430

$180,000.00

59

San Jose

FIA Card Services, N.A.

2,969

$175,000.00

96

Riverside

FIA Card Services, N.A.

4,601

$164,241.00

50

Davis

FIA Card Services, N.A.

287

$150,000.00

134

University of California, San Diego, Alumni Association California State University, Los Angeles, Alumni Association Sacramento State Alumni Association

San Diego

FIA Card Services, N.A.

256

$100,225.00

108

Los Angeles

FIA Card Services, N.A.

310

$100,000.00

28

Sacramento

FIA Card Services, N.A.

386

$90,000.00

79

Pepperdine University Alumni Association

Malibu

U.S. Bank National Association ND

694

$89,388.00

80

University of CaliforniaIrvine Alumni Association Santa Clara University

Irvine

FIA Card Services, N.A.

5,158

$88,724.00

81

Santa Clara

FIA Card Services, N.A.

3,250

$69,310.00

53

Chapman University

Orange

1,314

$62,000.00

48

FIA Card Services, N.A. Sonoma State University Alumni Association, Inc. Rohnert Park FIA Card Services, N.A. University of CaliforniaSanta Cruz Alumni Association Santa Cruz FIA Card Services, N.A. 3,509 $54,750.00 79 1,091 $58,750.00 22

California Polytechnic State University Alumni Association, San Luis Obispo Cal Poly Pomona Alumni Association

San Luis Obispo

FIA Card Services, N.A.

3,658

$53,098.00

24

Pomona

FIA Card Services, N.A.

177

$50,000.00

10

Loyola Marymount University

Los Angeles

FIA Card Services, N.A.

1,498

$50,000.00

45

University of Southern California Alumni Association University Corporation, San Francisco State

Los Angeles

USC Credit Union

104

$38,000.00

104

San Francisco

FIA Card Services, N.A.

1,681

$31,535.00

56

University of San Diego Alumni Association

San Diego

FIA Card Services, N.A.

1,018

$31,250.00

20

Humboldt State University Alumni Association National University

Arcata

FIA Card Services, N.A.

420

$20,000.00

San Diego

FIA Card Services, N.A.

1,082

$17,703.00

22

University of California, San Francisco, Alumni Association University of San Francisco

San Francisco

FIA Card Services, N.A.

617

$15,259.00

San Francisco

FIA Card Services, N.A.

1,274

$14,453.00

33

University of Redlands

Redlands

FIA Card Services, N.A.

864

$9,899.00

Gemological Institute of America Alumni Association University of La Verne

Santa Monica

FIA Card Services, N.A.

1,405

$9,860.00

44

La Verne

FIA Card Services, N.A.

549

$9,204.00

California State University, San Marcos, Alumni Association Whittier College

San Marcos

FIA Card Services, N.A.

214

$8,033.00

Whittier

FIA Card Services, N.A.

500

$7,484.00

Alumni Association, Cal State Bakersfield Foundation Saint Mary's College of California

Bakersfield

FIA Card Services, N.A.

287

$5,939.00

Moraga

FIA Card Services, N.A.

304

$5,197.00

University of the Pacific

Stockton

FIA Card Services, N.A.

289

$4,827.00

Alumni Association School of Medicine of Loma Linda University Butte College Foundation

Loma Linda

FIA Card Services, N.A.

172

$2,945.00

Oroville

U.S. Bank National

546

$2,838.00

157

Association ND Mount Saint Mary's College Los Angeles FIA Card Services, N.A. Biola University La Mirada FIA Card Services, N.A. Claremont McKenna College Alumni Association, Inc. Claremont FIA Card Services, N.A. 245 $2,592.00 4 190 $2,716.00 1 340 $2,811.00 2

Golden Gate University

San Francisco

FIA Card Services, N.A.

278

$2,039.00

California Lutheran University

Thousand Oaks

FIA Card Services, N.A.

83

$1,374.00

Academy of Art College

San Francisco

FIA Card Services, N.A.

121

$1,167.00

John F. Kennedy University Alumni Association Dominican College of San Rafael

Orinda

FIA Card Services, N.A.

81

$1,013.00

San Rafael

FIA Card Services, N.A.

53

$424.00

University of California at Los Angeles-Medical Alumni Association Western State University Alumni Association

Los Angeles

FIA Card Services, N.A.

16

$361.00

Fullerton

FIA Card Services, N.A.

29

$321.00

California School of Podiatric Medicine at Samuel Merritt College La Sierra University, La Sierra Alumni Association California State University Stanislaus

Oakland

FIA Card Services, N.A.

14

$260.00

Riverside

FIA Card Services, N.A.

18

$234.00

Turlock

FIA Card Services, N.A.

42

$178.00

20

Birla Institute of Technology and Science Alumni Association California School of Professional Psychology

Sunnyvale

Capital One, N.A.

32

$164.00

32

Alhambra

FIA Card Services, N.A.

$54.00

California State University Dominguez Hills Foundation, Inc. California State University, Chico, Alumni Association and the University Foundation California State University Chico California State University, Fullerton, Alumni Association California State University, Hayward, Alumni Association California State University, Northridge, Alumni Association

Carson

FIA Card Services, N.A.

1,175

$0.00

Chico

FIA Card Services, N.A.

191

$0.00

54

Fullerton

FIA Card Services, N.A.

1,167

$0.00

Hayward

FIA Card Services, N.A.

266

$0.00

Northridge

Chase Bank USA, N.A.

$0.00

TOTALS Source: Federal Reserve Board

134,959

$6,580,788.00

3,310