A multi-million dollar deal cut between the University and Bank of America — one that pays the University big bucks to sell student, alumni and faculty contact information to bank solicitors — pays even bigger bucks if those using the Bank of America credit cards go into debt.

According to documents obtained by The Red & Black, the University  received more than $12.5 million from the contract since 1999.

And as personal finances across the country continued to deteriorate, the agreement netted nearly $1.3 million — the most since the agreement began — in fiscal year 2010 alone.

The pact requires the Arch Foundation, the University’s main fundraising arm, to provide Bank of America with a list of at least 180,000 names, addresses and telephone numbers that the contract refers to as “members.” According to the contract, members can be nearly everyone associated with the University: parents, donors, season ticket holders and every student who has not opted out of the University directory.

“This is just another example of how UGA has lost sight of its actual job, which is to educate, and has become like a giant corporation focused on financial gain,” said Amanda Reinke, a senior from Augusta. “I think that’s audacious of UGA to go out and give information away like that, and then to keep it from us.”

“The target market for our collegiate affinity cards are alumni and team fans,” wrote Betty Riess, a spokeswoman for Bank of America, in an e-mail to The Red & Black.

Overall, Riess said only 2 percent of accounts were held by students, and the agreement between the bank and the University is nothing unique — Bank of America has similar agreements with about 700 other colleges and universities. At the University, of the 23,000 total affinity accounts last fall, about 1,200 were student accounts, said Tom Landrum, senior vice president for external affairs.

That’s a little more than 5 percent of student-held affinity accounts.

An affinity agreement is a mutual contract between two organizations. At the University, credit cards in the affinity program can be emblazoned with either the Arch or Uga.

In 2006, Cynthia Coyle, executive director of the Arch Foundation, signed an addendum to the agreement ensuring the organization would net at least $1 million per year as an advance against future royalties.

At that time, the benefits of the contract were transferred from the UGA Foundation to the Arch Foundation and will last until 2013.

Coyle said once Bank of America pays the Arch Foundation, the funds are equally split between the Athletic Association, the Alumni Association and the Arch Foundation.

“The Arch Foundation gets one-third,” she said. “We allocate it out immediately.”

The contract nets the University $1 per student card opened, plus 0.4 percent of all retail transactions. According to the contract, if the student has a balance at the end of every 12-month period, the University collects another $1.

However, Debbie Dietzler, executive director of alumni relations, says that’s not the case.

Dietzler referenced a 2006 addendum that she said no longer requires the card to carry a balance in order for the University to collect.

“From my understanding, what they’re considering the renewal is not about the balance, rather [that it’s] an active card,” she said.

But according to the 2006 addendum, no such change exists.

“They are not making a great deal of money from that,” Landrum said. “We generate most of our funding from just the original agreement [not renewal funding].”

The story is similar for non-student credit cards — $1 per account opened, 0.5 percent of all retail transactions and an additional $1 if a balance remains on the card at the end of every 12-month period.

Landrum said affinity cards were not originally created for students, but for alumni who wanted to show school pride and raise money for their university at the same time.

“It really comes down to an adult relationship,” he said. “That in my mind is a responsible action by an individual who wants to help his or her school.”

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According to the contract, the annual percentage rate for a non-student member is a variable rate of prime plus 7.9 percent and 9.9 percent for student members. But Riess wrote in an e-mail “the rate on the Student Visa Platinum card is 14.24 percent plus Prime.”

However, in documents obtained by The Red & Black, no change of the original rate was noted.

The addendum states Bank of America will not have to pay the Arch Foundation the guaranteed $1 million if it is prevented from conducting at least five direct mail campaigns and three telemarketing campaigns to the full list of members.

According to the contract, Bank of America is permitted to hold on-campus promotions at major events, as well as at least seven home football games and three home basketball games.

However, Riess said bank representatives haven’t conducted tabling events “for some time,” and haven’t mailed information to students for a couple of years.

Landrum said that while Bank of America is still permitted to engage in on-campus solicitation — as long as it follows University guidelines and recent credit card solicitation laws — its appearance on campus “has been pretty spotty.” He added the majority of students who sign up for the cards do so at banking centers, not at Tate Plaza tables.

In 2009, President Barack Obama signed the Credit Card Accountability, Responsibility and Disclosure Act, bringing sweeping change to the way banks can solicit to consumers.

According to the legislation, people younger than 21 would not be permitted to sign up for a credit card without a co-signer or showing their means for repayment.

Additionally, the free gifts from banks to sign up for a card — such as the ones used to entice students in Tate Plaza — were prohibited when the legislation took effect in February.

“It’s a good thing that they can’t really entice you into it,” said Ashley Puckett, a senior from Statham, adding the agreement negatively affects her trust in the University. “It’s your own decision whether you want to get a card or not.”

If Puckett were sitting in the same Tate Plaza location a few years ago as she was Wednesday afternoon, she may have seen tables of Bank of America representatives offering T-shirts, hats and Frisbees to students in exchange for filling out credit card applications.

Puckett said she, too, found herself in debt — to the tune of three credit cards. Now down to two due to her part-time job, she offered some advice to students tempted by creditors.

“Don’t get more than one,” she said. “Don’t spend more than you can pay off.”

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As debt among students increases, so does the amount the Arch Foundation receives from the agreement. For fiscal year 2010, the Arch Foundation netted $1,294,855.62 — a more than 10 percent increase from the previous year. The University netted $1,168,808 in FY 2009 and $1,013,048 in FY 2008.

The money raised from the contract for the Arch Foundation goes into a non-discretionary fund, and “every bit of it goes back into supporting the activity of the Arch Foundation,” Landrum said.

One of those activities includes the President’s Club event, a $25,000 to $30,000 gala where they “invite those donors to the University of Georgia and we invite them to a reception and tell them how their funds are used,” Landrum said.

John McCosh, spokesman for CredAbility, a nonprofit credit counseling organization, said it’s not necessarily a bad idea for students to have credit cards, provided it comes with a low credit limit of about $1,000.

“Students are having more financial problems, just like everyone else is, in part because their parents are less likely to come to the rescue if there’s a problem,” McCosh said.

His advice for students — create a budget.

“If you start to get in trouble, buckle down and try not to carry these habits along later in life,” said McCosh, who said he often advises clients with tens of thousands of dollars of debt who fell into bad financial habits in their teens and young 20s.

McCosh stressed when someone charges a purchase on a credit card, they are taking out a loan. And like most loans, credit cards come with interest rates.

“In this economy, a good [interest rate] would be probably the low teens,” McCosh said, adding the 14.24 percent interest rate plus prime from Bank of America’s student card is “not bad.”

Riess said students in the Bank of America program will not see an increased interest rate for any reason, no matter what.

“We take a fair and responsible approach to lending,” wrote Riess when asked to provide a statement regarding the University profiting from student debt. “[A]nd, when we do provide credit cards to students under 21 who have the ability to pay or a guarantor with such ability, we have different terms and a strong educational component.”

Other universities, such as the University of Michigan, have since made agreements with Bank of America to cease solicitation of affinity credit cards to students.

While the University of Georgia has yet to formalize any such agreement, Landrum said he “would be open to discussing with Bank of America any addendum.”

Meanwhile, Coyle said she received word from Bank of America that they are not “actively soliciting any student right now.”

“We’re very concerned and very cautious with our students — they’re very strict about who they give a card to,” Coyle said, adding roughly half of student applicants are denied credit.

But Landrum says the responsibility belongs in the hands of the person swiping the card.

“As far as the University profiting from the card because of debt, I don’t have any hard data on that,” Landrum said. “I see that as a part of a contract that is a student’s decision as to whether or not that student wants to have a card, and whether they want to have a balance. I don’t see that as taking advantage of them.”