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Tuesday, February 19, 2013

CFPB probes campus financial products

The Consumer Financial Protection Bureau launched an inquiry into the financial products marketed to college students. The bureau expressed concern that products like financial aid disbursement cards and campus ID cards that double as prepaid debit cards are not consumer friendly financial instruments for college and university students.

"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 CFPB seeks public input concerning:

  • What information schools share with financial institutions when they enroll students in card programs
  • How campus financial products are marketed to students
  • What fees students are being charged to use financial products
  • How schools set up marketing agreements with financial institutions
  • What students experience when using campus financial products in their day-to-day lives

The CFPB noted that the Credit CARD Act of 2009 restricts financial institutions from using certain types of marketing practices on college campuses and requires providers make certain disclosures to students.

In August 2012, a CFPB blog post advised students that they were not required to use a specific bank or card to access student aid. Additionally, students should consider opening financial aid accounts before arriving on campuses and sign up for direct deposit of financial aid if given that option by schools, according to the CFPB. The bureau is accepting public comments about campus financial products until March 18, 2013. end of article

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