Companies drawing students into financial sinkholes were featured in a book released this year by Stephen C. Talbott.
One such company is located right on High Street: Potbelly Sandwich Works.
“How Much Should I Borrow For College?” contains a chapter about companies, such as Potbelly’s, that target college students.
The chapter, titled “Ripping Students Off at College,” says that in 2006, Potbelly’s advertised a free sandwich and drink for students who participated in a “3 min. promo.”
The ‘promo’ was applying for a Citibank credit card.
The Ohio attorney general sued the restaurant in 2007, claiming the flier was deceptive advertising.
Talbott said in the book that “enticing a large child — i.e., a student — to apply for a credit card with free food is the financial equivalent of offering the same adolescent a puff of crack cocaine before clinching the drug deal.”
Some Ohio State students agree.
“I think college students are a prime market, with our ‘buy now, pay later’ mentality,” said Lexi Roman, a third-year in special education.
As Talbott said, many college students are easy targets.
“I think credit card companies prey on college students,” said Caitlin Maloy, a third-year in biology. “Companies know students are broke … but they fail to mention all the debt and harm credit cards can cause when misused.”
Talbott uses the increasing number of students with high credit card balances and even higher student loan debt as examples to back up his arguments.
Estimates of student credit card debt vary. In his book, Talbott said the average credit card debt was $2,623, but a 2010 study by Sallie Mae, a college financing company, found the average undergraduate had $3,173 in credit card debt last year.
Credit card debt also becomes more prevalent the longer a student is in school, according to the same Sallie Mae study.
Potbelly Sandwich Works settled with the attorney general in 2008.
The restaurant paid for a showing of “Maxed Out,” a film about questionable loans and the damage they caused, on campuses across Ohio. They also provided sandwiches to entice students to the event.
The settlement cost Potbelly’s around $12,000, according to an estimate reported in The Columbus Dispatch.
That’s about half the debt the average college student graduates with, when student loans are included in the tally.
The average student loan debt for graduating seniors in 2008 was $23,186, according to a study done by the National Center for Education Statistics.
“I think we have scholarships available to students, but somehow it doesn’t feel like enough,” Roman said. Despite her many scholarships, she still uses loans to pay for school.
“I’ve lived in Ohio my whole life, but my parents relocated to a different state my senior year of high school, and I’m left to pay out-of-state tuition,” Roman said.
The average cumulative debt, including credit cards, private and federal loans was $27,803 in 2008, according to the National Center for Education Statistics.
In February of this year, a new law took effect that bans offering students on or near a college campus any tangible item to encourage them to apply for credit cards, according to Talbott’s book.
“Society demands that they go to college,” Talbott said. “The schools, meanwhile, jack tuition through the roof, and states trim their support for education.”
Average tuition and fees at four-year public universities rose 6.6 percent in 2007, according to an MSNBC article.
From 1999 to 2000, the average tuition at four-year private colleges increased 2.6 percent faster than the Consumer Price Index, according to the College Board’s 2009 Trends in College Pricing report.
OSU will raise tuition 7 percent in the coming year, splitting the increase between Summer and Autumn quarters.
“Students and families are left to make up the difference,” Talbott said. “Into this yawning gap stroll the slick private lenders with their ‘crack cocaine’ credit cards and private loans.”
