Colleges are famously ranked based on factors like academic reputation, how well they retain students, and how selective they are about admissions. Regulators would now like to see schools be choosy about the banks they partner with on campus.
On Wednesday the Consumer Financial Protection Bureau released a preliminary "Safe Student Account Scorecard" that colleges could use to assess product fees before they sign a contract with a financial institution. About 40 percent of college students attend schools that contract with a financial services firm to offer debit or prepaid cards to students. While the schools may get a share of the revenue, and banks get access to new customers, regulators say it isn't clear whether students are paying more than they should for these accounts.
"Without clear information on specific account features and fees, it may be hard to tell which products provide the best deal for students," said CFPB director Richard Cordray.
The agency is seeking public input on the scorecard, with comments due by March 16. The scorecard, said CFPB student loan ombudsman Rohit Chopra, would function as a "negotiating tool" for colleges to "get the right information, to make sure they're partnering with the right institution."
Categories in the draft version include: any fees charged for products like mobile banking and electronic statements; disclosure of marketing practices, such as how a bank would co-brand products with college logos; transparency over contract terms, such as revenue-sharing agreements between schools and banks; and an annual summary of fees charged to students.
The Credit CARD Act of 2009 regulates campus marketing practices, as well as revenue-sharing disclosures, related to credit cards, but the law doesn't apply to student debit and prepaid cards. In the past three years, both the Federal Reserve Board and the Federal Deposit Insurance Corporation have cracked down on deceptive practices related to student bank accounts.