Just a couple of months ago came reports that marketing credit cards to college students continues its decline. Unfortunately, this good news is tempered by the fact that schools and banks are partnering to find other ways of making money of our kids. This is disturbing news, indeed, as college students need every dollar they can sock away for paying off student loan debt, which now exceeds credit card debt for the first time in U.S. history.
Unlike credits cards, which have been placed under stricter regulations outlined by Dodd-Frank financial reform, other types of bank-associated products for college students are flying under the radar, including student ID debit cards, financial aid cards, and c0-branded bank accounts. What’s worse is that most college students are either unaware they can opt out of these products, or they are under the impression there are no practical alternatives.
In response, the Consumer Financial Protection Bureau (CFPB) has launched an inquiry into the relationship between colleges and banks, within the context of marketing financial products to students. As reported by The Consumerist, specifically, the CFPB wants to determine:
- 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
- Student experiences using campus financial products in their day to day lives
It’s certainly no surprise that colleges and banks have gotten creative with their on-campus money-making ways. Marketing credit cards to students has historically made the schools tens of billions of dollars a year. But thanks to the Credit CARD Act, students under 18 years old can no longer qualify for a credit card unless they have a co-signer OR they can prove sufficient income to pay off the balance.
What do you think about colleges and banks partnering on financial products that take money out of the pockets of college students? The CFPB is asking for public comment through March 18, 2013. You can share yours by emailing CFPB_StudentsFedReg@cfpb.gov.