Credit card issuers have found loopholes in regulations designed to limit marketing of student credit cards on campus, according to a professor at the University of Houston Law Center. In a new study released this month, professor Jim Hawkins reveals evidence that the Credit CARD Act has done relatively little to restrict aggressive sales tactics on college campuses and at school events. In addition, Hawkins suggests that banks have failed to honor the intent of guidelines that would limit students' credit limits to the amount they can reasonably repay from regular income.

Hawkins reviewed 300 agreements between credit card issuers and colleges or their alumni organizations. Despite expectations that the Credit CARD Act would change the way banks interact with schools, nearly two-thirds of the agreements Hawkins studies contained no material changes after the Act's implementation. In a statement to reporters, Hawkins said that only two of the 300 agreements cited new federal rules as the inspiration for changes between 2009 and 2010.

Campuses still hotbeds of credit card marketing, says professor

Hawkins also conducted a survey of 500 college students to learn more about how young consumers gain access to new credit cards. More than two-thirds of respondents said they received credit card applications in the mail, even though the Credit CARD Act's sponsors expected banks to curtail the practice. 40 percent of students surveyed told Hawkins and his team that they witnessed bank representatives exchange tangible gifts for completed applications, even after marketing restrictions had taken effect.

Meanwhile, students' views about money may have unintentionally skewed attempts to restrain credit limits for younger consumers. Hawkins' study found that many young applicants list student loan disbursements as part of their annual income on credit card applications. Banks only have to base credit line assessments on applicants' self-reported income, making the practice legal. Applicants under the age of 21 must still have an adult co-signer, but Hawkins found that banks have issued more student credit cards than lawmakers expected.

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