Are Student Credit Cards Really That Big of a Deal?

A new report from the Federal Reserve shows that colleges in the United States took in $83 million from credit card companies last year.

In exchange, they offered their marketing help to the card issuers, often by providing alumni mailing lists and promotions. Whether these marketing programs are actually effective is an open question.

According to a BankRate summary of the data released by the Fed, "In 2009, credit card issuers paid a grand total of nearly $83.5 million to colleges or related organizations Last year, 53,164 new credit card accounts were opened under these agreements." That works out to about $1,570 per account, much of it driven by college-branded cards marketed to alumni.

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An issue like this, however, is really is about the principle. CBS MoneyWatch college writer Lynn O'Shaughnessy said that she would feel "exploited" if she were a student at a school taking money from the credit card industry, and others have chimed in with similar thoughts.

But here are the real numbers: The average college student graduates with about $4,100 in credit card debt, and $24,000 in student loans. So, just based on these numbers, if you want to help students avoid debt, you'd really be better off kicking the financial aid office from campus than giving credit card issuers the boot. Most college students who find themselves larded down with excessive debt did it with the help of the federal government's loan programs and the non-profit college's financial aid office. The colleges themselves are delivering a much more severe body blow to the finances of American college students than any corporate titan could ever dream of doing.

How can $4,100 in credit card debt be a serious problem when six times as much in student-loan debt isn't? Oh, and by the way, credit cards can often be discharged in bankruptcy. Student loans? Almost never.

Obviously college students should avoid credit card debt. But they should also avoid student loan debt. And a $4,100 credit card debt is a much less serious problem than $24,000 in student loans.

Zac Bissonnette'sDebt-Free U: How I Paid For An Outstanding College Education Without Loans, Scholarships, Or Mooching Off My Parentswas called "best and most troubling book ever about the college admissions process" by The Washington Post.