Credit unions that offer financial products in partnership with college campuses, such as ID cards that function as debit cards, will want to keep tabs on a new Consumer Financial Protection Bureau inquiry into whether such arrangements are in the best interest of students.
The CFPB announced the new project Thursday and will collect comments through March 18.
“We have seen many colleges establish relationships with financial institutions to offer banking services to their students,” said CFPB Director Richard Cordray. “The bureau wants to find out whether students using college-endorsed banking products are getting a good deal.”
The CARD Act restricted financial institutions from using certain types of marketing practices on college campuses and made agreements between credit card issuers and institutions of higher education subject to public disclosure.
The CFPB maintains an online database of college credit card agreements. The list is dominated by banks but does include some credit unions.
In a release, the CFPB said less is known about arrangements regarding other products marketed to students such as student identification cards that double as debit cards, cards used to access scholarships and student loans, and school-affiliated bank accounts.
The CFPB is asking the public, students, families, the higher education community, and financial institutions to provide input on their experiences with these products. The Bureau is seeking input on a variety of related issues including:
- What information schools share with financial institutions when they establish these relationships;
- How campus financial products are marketed to students;
- What fees students are being charged to use these products;
- How schools set up marketing agreements with financial institutions; and
- Student experiences using campus financial products in their day to day lives.
The comment request, along with information on how to electronically submit comments, is located on the CFPB’s website.
The inquiry may have been prompted by Congressional pressure. In June 2012, Sen. Dick Durbin (D-Ill.) and Rep. George Miller (D-Calif.) urged Cordray, Education Secretary Arne Duncan and Department of Education Inspector General Kathleen Tighe to examine student debit card programs at more than 900 colleges and universities.