WASHINGTON (2/1/13)--Students, families, educators and financial institutions can help the Consumer Financial Protection Bureau gather information for its latest project: Examining the impact of financial products that are marketed to students through their colleges and universities.
"We have seen many colleges establish relationships with financial institutions to offer banking services to their students," CFPB Director Richard Cordray said. "The [CFPB] wants to find out whether students using college-endorsed banking products are getting a good deal," he added.
The CFPB is asking for details on:
- 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.
Student identification cards with debit card features, cards tied to scholarship and student loan funds, and school-affiliated bank accounts are among the items the CFPB is researching.
Credit unions in many states offer the benefits of credit union membership to students through on-campus branches or college- or university-affiliated credit unions that serve students and employees of the school.
One credit union, Orlando-based Fairwinds CU, became the official campus financial institution of the University of Central Florida (UCF) late last year. The credit union replaced SunTrust Bank, and university officials said it was clear that the credit union sought to be more than a business partner and recognized it would be investing in students who are future community leaders. Fairwinds offers university ID debit cards, free checking accounts, free money orders and financial education resources to UCF students.
Current law prevents card issuers from opening new credit card accounts for students under age 21, unless they can prove sufficient income to repay the card balance or have a co-signer over the age of 21 who has sufficient income to repay the debt. Certain marketing practices, including mail solicitations and gift offers on or near a college campus, are also prohibited. Credit card companies can still contact students and offer gifts in exchange for signing up for credit cards so long as it is done electronically, and students can open checking accounts, which may lead to taking out a credit card.
For more on the CFPB's latest endeavor, use the resource link.