PhotoColleges seem trustworthy. After all, we entrust them with our children's education. But, as in most of life, all is not always as it seems. Too often colleges partner with financial institutions that lure students into checking and prepaid card accounts that are anything but attractive. 

The Consumer Financial Protection Bureau (CFPB) would like to level the playing field a little and is proposing a “Safe Student Account Scorecard” that would help colleges to avoid partnering with financial institutions that offer less than desirable deals.

The scorecard would help colleges access upfront information about fees, features, and sales tactics before agreeing to a sponsorship. 

“An important issue for young people is how best to manage their money while they are still in school,” said CFPB Director Richard Cordray. “Because of the influence schools may have on the financial products students choose, we are working to arm them with the information they need to negotiate safe and affordable products for students.”

The idea sounds good to Janet Napolitano, president of the University of California. She said UC "supports transparency and is continuously monitoring its own vendors and financial partners to ensure they comply with UC's high standards and that our students' financial interests are protected."

She said universities "should look to CFPB's new tool as part of their efforts to assess their institutions' financial services arrangements and the impact on their students."


Many colleges now make deals with financial institutions, where the college helps with or allows the promotion of credit, debit, or prepaid cards, sometimes endorsed with a college logo or linked to a student identification card.

Colleges, either directly or indirectly, typically get a share of the revenue generated from the cards -- a kickback, in other words. The CFPB has identified agreements where financial institutions offer royalty payments for use of college trademarks or bonuses based on the number of student account sign-ups.

The Credit CARD Act of 2009 (CARD Act) restricted financial institutions from using certain types of credit card marketing practices on college campuses and requires that agreements between credit card issuers and colleges be publicly available.

But marketing partnerships between colleges and banks have shifted over the past five years. Agreements to market student debit and prepaid cards have surpassed the number of agreements to market student credit cards. Forty percent of college students attend schools with agreements to provide debit or prepaid cards.

A CFPB analysis of one university system revealed that the school-endorsed financial product received the highest adoption by students receiving financial aid.


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