The University of Colorado at Boulder for years was paid for every student who held a credit card from an on-campus credit union, but it will not accept the payments when it signs a new marketing deal for financial services next year, the school said Wednesday.
The school will, however, continue to be paid a premium for every bank account and ATM/debit card that a student, employee or faculty member opens with a financial institution contracted to offer the services — currently Elevations Credit Union, formerly the University of Colorado Federal Credit Union.
The change comes shortly after The Denver Post detailed how several colleges, universities and their alumni associations in Colorado make money marketing financial services to students, including credit cards, sometimes exchanging royalty payments for access to coveted mailing lists.
Though CU’s contract with Elevations currently grants access to its student mailing lists, the university said it disallowed the practice long ago, only allowing students to receive a packet during orientation detailing the availability of the credit union’s services.
Credit cards are marketed only to CU students and staff who have opened an account at the credit union, according to a copy of the contract. That deal, signed in 2004, ends next year and pays the school a minimum of $52,000 a year.
A separate contract between the University of Colorado Foundation and FIA Card Services, owned by Bank of America, allows credit cards to be marketed to student and alumni members of the association.
New contract for 2011
CU is seeking bidders for a new contract to begin next year and specifically says it will not consider any proposal that gives the school any profit from anyone’s acquisition of a credit card.
“We don’t believe we should get incentives for students who sign up for credit cards,” said Ken McConnellogue, associate vice president for university relations. “We have an obligation to help students with financial literacy.”
According to the school’s request for proposal, “the university will not accept any provision whereby UCB earns revenues tied to the number of student, faculty or staff credit card accounts opened or percentage of spend(ing) or balance carried” on those accounts.
CU still gets paid
The prohibition is merely window dressing since CU is currently paid a base minimum — $13,000 per quarter — on accounts that students and faculty maintain at the credit union. Should the number of credit and checking accounts — paid at $1.25 to $1.75 each — exceed the minimum, then the school makes more money.
But records show the school has been paid more than the minimum only once in the life of the contract — in 2004.
As of today, 5,809 credit- union accounts belong to students, faculty and staff, CU said. Of those, 2,197 have a Visa credit card.
There are about 30,000 students at CU’s Boulder campus and 5,100 faculty and staff.
David Migoya: 303-954-1506 or dmigoya@denverpost.com
