Those of us who have stepped out of college and into the working world are all too familiar with clever credit-card traps designed to lure students. Many of us were approached as unsuspecting undergraduates, perhaps on a game day stroll through campus: “Sign up for this gold card, and get this fabulous T-shirt!” “Free beach towel for applying with us!” “Need a water bottle? Just give us your Social Security number, and it’s yours!”

On some campuses, like the University of Georgia, credit-card companies are welcome to appear on school grounds. According to UGA Policy Analyst Chuck Toney, the school allows Bank of America (BAC) to hawk cards to students on campus at the beginning of every semester and during football games.

“We do get some revenue back through that relationship,” Toney said.

Although the exact terms of UGA’s deal with Bank of America are confidential, similar agreements between universities and credit-card companies have been known to be worth almost $20 million a year.

Toney said the funds UGA receives are used by organizations such as the university alumni association and athletic programs. Although Toney conceded he was unaware of the terms of the cardholder agreement, he stressed that the credit cards offered on campus were “Georgia cards,” pointing out, “They have the UGA logo.”

But Ben Woolsey, Marketing Director of CreditCards.com, says the schools have basically no control over the cards being doled out.

“The actual terms of any kind of affinity card are strictly controlled by the issuing bank,” Woolsey said. In fact, according to CreditCards.com, interest rates for student credit cards are often much higher than those for normal consumer cards. The interest rate on the Capital One (COF) Platinum for Students card is 19.80%, much higher than the national average of 13.44%.

 “The banks price it higher just because they can,” Woolsey said. “Students don’t have an enormous amount of options and the [credit card companies] take advantage of this.”

Woolsey, who previously worked in student marketing for JPMorgan Chase (JPM), says that credit-card companies solicit on or near college grounds for the sole purpose of attracting new, naïve customers.

“Campus activities are the biggest source of accounts for credit card companies,” Woolsey said. “It’s amazing the response they get for just a T-shirt. They know that students will sign up for anything.”

Woolsey added that it’s easier for credit card companies to target students because their credit histories don’t have to be reviewed.

“Students are kind of a blank slate,” Woolsey said. “And credit card companies know that if the kids get into trouble with debt, the parents will step in and help out.” In other words, students are low-risk, high-yield propositions.

But what about the universities that don’t entertain credit-card solicitation on their grounds, like the University of Arizona and Yale? They still have to contend with the problem.

Johnny Cruz, director of media relations at the University of Arizona, pointed out how easy it is for credit-card vendors to set up kiosks on street corners that aren’t campus property, yet still close to student traffic.

Even with cautionary tales such as these, more than half of all college students sign up for their first credit cards because of direct marketing, according to a 2004 study by loan provider Nellie Mae. That study also shows that the average college freshman has two credit cards; by the time they’re seniors, they have five.

Students who want to avoid the hassle and debt should avoid signing up for anything they haven’t thoroughly researched. Using a checking account, and researching the terms of the card agreements before applying are great first-steps for both freshmen and credit-card neophytes.

Here’s a list of three important credit-wise tips that students should keep in mind before hitting campus.

Take out student loans instead of charging things on credit cards. According to the most recent statistics, the average government student loan carries an interest rate of 6.8%. Compare this with the average credit card interest rate of 13.44%, and there’s really no contest. A lot of students shy away from loans for fear of getting into debt, and only end up in a more drastic situation with credit cards. Government loans are always the best way to go.

Open only ONE credit card account. You need to build credit, but you need to be smart about the card you choose. Research a card’s interest rate and reward programs, and make an educated decision. Remember that if you apply for a credit card on a lark, you’ll probably find it in the mail a week later! Don’t sign away your Social Security number for freebies.

Use your checking account. As opposed to “fake” credit card money, a debit card allows you to keep track of your spending. Even though credit cards offer rewards that debits don’t, nothing beats interest-free plastic. This way, you can watch the money you’re spending.

We’ve all heard, “If you can’t afford it, don’t buy it.” With a debit card, if you can’t afford it, you can’t buy it. Just be careful not to exceed your balance, or you could endup with overdraft fees.

Never underestimate the importance of debt education before the school bell rings. And the next time a credit card company waves a gorgeous new T-shirt in your face, remember those sky-high interest rates before you sign on the dotted line.