Maxed out student credit cards might soon become a thing of the past.

Or, at least that is part of the goal of new legislation that is expected to go into full effect at the start of the new year that will limit the possibilities for students under the age of 21 to open credit accounts nationwide. The new rules, which were signed into law by President Barack Obama in May, tighten restrictions on credit card companies trying to raise interest rates and curb the ways in which companies can market credit cards to teenagers and college students.

Underage students will have to prove they have the essential assets and income to pay off a credit card, and banks will no longer be allowed to provide giveaways on campuses in exchange for students opening a credit account.

Jerry Sigler, senior vice president and CFO of the University’s Alumni Association, said the contract the University has with Bank of America will not be significantly affected by the new legislation because it mostly targets alumni.

The University currently has a $25 million, 10-year contract with Bank of America that started in 2004, according to Sigler.

As reported in The Michigan Daily in February, under that contract, the Alumni Association provides Bank of America with student and alumni information in exchange for revenue for the Alumni Association based on the number of credit card accounts opened.

Sigler said the Alumni Association has been working with Bank of America over the past several months to develop plans to modify the way the bank works with the University to fit the terms of the legislation. This includes terminating direct mail marketing to students — which Sigler said Bank of America hasn’t done in over a year — and not setting up tables around campus as the bank had done in the past, though there will still be tables in Michigan Stadium.

Though the Alumni Association will be required under contract to make these changes, Sigler said the changes aren't far from the way things are already run.

“The kinds of changes they would need to make in their marketing campaigns more or less are already being made,” he said.

Sigler said the new legislation will just reinforce the main goal with the Bank of America agreement, which is to market the bank’s card to alumni. He acknowledged, however, that current students are also eligible for the card, but the bank’s direct targeting of students will now be more limited.

Under the current Bank of America agreement, there are 73,000 alumni accounts open and 1,500 student accounts open, according to Sigler. So long as the 10-year contract remains in place, the revenue from these accounts will remain constant. The legislation could affect the terms of a possible future contract, though.

Christine Lindstrom, director of the Higher Education Project on debt conducted by the United States Public Interest Research Groups, said there are two key provisions within the CARD Act that will protect students as consumers.

The first condition Lindstrom highlighted is the issue of tabling and handing out giveaways in exchange for opening a credit account, which will no longer be permitted on campuses after this legislation comes into affect. Lindstrom said that without giveaways, students will be more focused on the terms and conditions of the credit agreements they’re signing.

The second condition is that students under the age of 21 must have a cosigner or be approved via a financial background check prior to being approved for a credit card.

Lindstrom said the need for students to show income or assets before being able to obtain a credit card without a cosigner is also a major component to the new legislation that will enable students to be educated consumers.

“Previous to this point, students in college were the only consumers who weren’t held to a standard of what your income and your assets are,” Lindstrom said.