“We have seen many colleges establish relationships with financial institutions to offer banking services to their students,” explains Richard Cordray, Director of the Consumer Financial Protection Bureau. “The Bureau wants to find out whether students using college-endorsed banking products are getting a good deal.”
That’s why the CFPB announced earlier today that it’s launching an inquiry into the impact of financial products marketed to college students through their schools.
CREDIT CARDS ARE SO 2008
Most of you who went to college will probably remember having to regularly run the gauntlet of credit card booths set up in high-traffic areas of your campus. In 2009 the Credit CARD Act put restrictions on these marketing practices and required transparency in the form of public disclosures about any relationship that exists between the school and the credit card company.
But the new crop of products that have sprung up in recent years — the student ID debit cards, the financial aid cards, co-branded bank accounts marketed by the schools — don’t necessarily fall under these same regulations.
COMING UNDER SCRUTINY
Last year, the U.S. Public Interest Research Group released a report claiming that, while students at the schools offering these programs did have the chance to opt out, many students were either not aware they didn’t have to use these products, or that alternatives to these products were so onerous that students felt they had little choice.
“The campus debit card marketplace is tilted so that students can’t get a fair deal,” said Ed Mierzwinski, U.S. PIRG Consumer Program Director, at the time.
This immediately led to calls from lawmakers, including Illinois Senator Dick Durbin, for regulators to investigate the relationships that exist between schools and financial institutions.
HAVE YOUR SAY
To that end, the CFPB is asking the public, students, families, the higher education community, and financial institutions to provide input on their experiences with these products.
These are some of the topics the Bureau will be looking into:
· 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.
Comments on these issues are being accepted by the CFPB until March 18, 2013.
There are multiple ways to submit your feedback.
You can e-mail CFPB_StudentsFedReg@cfpb.gov or you can also send in printed responses to
Office of the Executive Secretary
Consumer Financial Protection Bureau
1700 G Street, NW, Washington, DC 20552
Full information about the request for information can be found here.