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Business and Policy Areas
Business and Policy Areas

Federal Reserve Proposes Rules on College Credit Card Arrangements

October 23, 2009

Colleges and universities will have to publicly disclose any agreements with credit card issuers related to the marketing of credit cards to students, under rules proposed by the Federal Reserve Board on October 21. Card issuers will also be required to file an annual report with the Board detailing all such agreements. The proposed rules implement the Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act), which mandates a number of consumer protections for credit card users. Comments are due November 20.

The Credit CARD Act restricts marketing of credit cards to students and young adults in several ways, reflecting congressional concern about aggressive marketing practices and rising debt levels for this vulnerable population. Among provisions directly related to campuses, the act prohibits credit card companies from offering any tangible goods as an inducement for applications on or near the campus of an institution of higher education or at a collegiate event.

Colleges and universities, or affiliated organizations such as alumni associations or foundations, would be required to publicly disclose any college credit card agreements. A college credit card agreement is defined as "any business, marketing, or promotional agreement between a card issuer and an institution of higher education or an affiliated organization in connection with which college student credit cards are issued to college students currently enrolled at that institution." Additional guidance provided in the official staff interpretation of this definition clarifies that an affinity card agreement would be covered even if marketing of the cards targeted alumni or other nonstudents, provided those cards could also be issued to students under the agreement.

Public disclosure of agreements could be accomplished by posting them on the institution's Web site or making the agreements available upon request (at no charge). Institutions could also use other means to meet the disclosure requirements. Contracts or agreements would have to be disclosed in their entirety. Any existing confidentiality clause would be invalid if it restricted the institution's ability to meet the public disclosure requirements.

Effective Date

Most provisions of the Credit CARD Act, including those related to college students, are scheduled to take effect on February 22. The effective date may be moved up, however. Some in Congress, upset at actions being taken by some card issuers in advance of the implementation of the new consumer protections provided under the Credit CARD Act, have introduced legislation to move the effective date up to December 1. The bill has well-placed supporters, including Rep. Barney Frank (D-MA), and was approved by the House Financial Services Committee on October 22. Federal Reserve Board Chairman Ben Bernanke gave the proposal mixed reviews, however, arguing that moving up the effective date would circumvent the opportunity for the public comment on the proposed rules.

Relevant Provisions

Due to the length of the notice of proposed rulemaking (210 pages), NACUBO has prepared an excerpt that includes only the portions relating to §226.57 that directly impact colleges and universities.


Anne Gross
Vice President, Regulatory Affairs