CFPB Scrutiny of Bank-College Partnerships Deepens
February 6, 2013
Relationships between banks and universities will be more thoroughly probed by the Consumer Financial Protection Bureau, with new regulations and limitations on certain practices a likely outcome. The watchdog launched a major data collection initiative last week, which could ultimately cause the agency to amend financial disclosures to students and restrict certain kickbacks that schools get for partnering with a bank. Through such alliances, banks offer students debit cards, savings accounts, or other kinds of credit that do not necessarily fall under the protections of the Credit Card Accountability Responsibility and Disclosure Act of 2009. One area the CFPB is investigating is student ID cards that can double as debit cards in exchange for partnering with a specific financial institution. The regulator is concerned not only about the contracts themselves between banks and universities but also how the underlying cards are marketed to students, who often are left to believe that they are mandatory -- not optional. "There's a lot of pressure from universities to strike these deals ... that would try to maximize the amount of money that the university is going to receive," notes Community First Credit Union of Florida President and CEO John Hirabayashi. "Anything that would protect the student and at least make them aware that they options is good."
External web links may expire.
Return to Headlines
Abstract News © Copyright 2008-2013 INFORMATION, INC.