CFPB Announces “Scorecard” For Campus Banking Products
By Consumers Union on Wednesday, January 14th, 2015
In a new effort to protect students being marketed campus banking products, the CFPB announced today that it is developing a “Safe Student Account Scorecard” for schools. The Scorecard will give schools a roadmap to negotiating a better deal for students when choosing a financial institution to offer bank accounts or prepaid cards on campus.
We’ve spoken out before on these school-bank partnerships, which can be problematic for students. Some of these arrangements are designed to cut costs or even make money for the school, but turn out to be a bad deal for students. Campus banking products can have high fees, or poor ATM access, and can be aggressively pushed onto students for receiving their financial aid. Our recent report examined 16 campus banking products, and found that the costs can add up quickly for heavy users if there are fees for ATM use, point-of-sale transactions or overdrafts.
Under federal law, students don’t have to use these accounts – they can choose direct deposit to an existing account, or even check or cash, in order to get their financial aid. But in practice, many students have been steered into campus banking products due to aggressive sales pitches and deceptive marketing materials.
The CFPB is taking public comments on the scorecard – if you want more information or want to submit a comment, go here.