FINANCIAL SERVICES: Tuition Check

First USA is rooming with Chris and Luke this year.

The Wilmington, DE-based division of Bank One Corp. signed a sponsorship deal in June, hiring the New Jersey teens as spokespersons in exchange for paying their tuition.

The marketing-minded boys had sought four sponsorship deals (April PROMO), but hit the dorms at Pepperdine University and University of Southern California, respectively, with just one (so they’d have more time for schoolwork).

The unique sponsorship deal is part of a bigger trend in financial education, one in which credit card companies and banks target families with programs that teach kids about money management — and may engender parent loyalty.

Seventy-one percent of parents say it’s “very important” that their kids master practical money skills before graduating high school, according to Visa USA’s back-to-school survey of 1,000 adults. That issue was topped only by concern for classroom discipline, cited by 81 percent.

“Only about 10 percent of students learn even the most basic money management before they graduate high school,” says Dara Duguay, executive director of The Jumpstart Coalition for Personal Financial Literacy, a nonprofit K-12 education group whose 115 members include American Express, MasterCard, and Visa. “There’s a huge supply of education programs, but no demand in schools.”

JumpStart has 250 programs in its clearinghouse, many developed by corporate consumer relations, community affairs, or marketing departments. It has turned down a handful of marketing-driven programs. “If it’s educational, we support it. If it’s pure marketing, we don’t support it,” Duguay says. “Most companies are very good about not putting logos all over it.”

Teens are financially active despite their limited knowledge. Nearly 70 percent of high school seniors carry a credit card, per JumpStart’s March 2000 survey of 723 students. Of that, nine percent have their own and 18 percent use their parents’ (up from nearly eight percent and 17 percent in 1997).

First USA is the first company to sponsor “student ambassadors.” Chris Barrett and Luke McCabe will host money management events at their own schools, on other campuses, and perhaps at a Spring Break hot spot. First USA let the boys settle in during September after a summer of p.r. appearances, and began planning marketing events last month. BSMG Worldwide, New York City, handles.

The bank has a one-year deal and right of first refusal on subsequent years. The boys are talking with potential sponsors in other categories for one-off events.

“We had been looking for a way to communicate a message of financial responsibility,” says senior vp-marketing strategy Doug Filak. “The best way to reach students is through students.”

First USA is the country’s biggest issuer of Visa cards, but less than one percent of its 51.7 million cardholders are college students. The college marketing launch this fall also includes a Student Advisory Board, a 10-student focus group, a student-directed Web site with info on money management, and a Financial Index survey of 400 graduating high school seniors to track their attitudes about money (see chart).

Separately, First USA’s First Mentor program, a partnership with Big Brothers Big Sisters of America, pairs college students with kids eight through 12. An essay contest awarded $1,000 scholarships to 42 “little” brothers and sisters for camp last summer, the second year for the promo.

Last spring, Visa USA launched Practicalmoneyskills.com, which offers age-specific activities and information for teachers and parents. Visa worked with JumpStart, the National Consumers League, and education portal EdGate.com to create an online personal finance curriculum (at www.visa.EdGate.com) available to five million students in 12,000 schools. Its Back To School Financial Literacy campaign also included seminars in Chicago and San Antonio and computer donations to high schools.

Last year, American Express launched the stored-value Cobaltcard for young adults with a brochure, “Take Charge of Your Money, Make it Work for You,” containing shopping tips and budgeting advice. Direct mail to cardholders’ parents gives tips on talking to teens about money management.

MasterCard this year rolled out Are You Credit Wise? seminars, which tested on 10 college campuses last year. It also has distributed a “Money Talks” brochure, mostly via College Parents of America, to students at 50 colleges.

Pending legislation may create more demand among schools for education programs. The U.S. Senate is considering the Youth Financial Education Act (S. 807), introduced in May and now before the Committee on Health, Education, Labor, and Pensions. (The House of Representatives’ companion bill, H.R. 61, went to subcommittee last March.) The bills would authorize the Secretary of Education to give grants of at least $500,000 a year to states to fund education programs for grades K-12 and training programs for teachers. They would also authorize a national clearinghouse for instructional materials run by “an entity with substantial financial education experience,” such as four-year-old JumpStart. Seven states have enacted bills, and five more have bills pending, per JumpStart.