U.S. regulators are calling on financial institutions to publicly disclose agreements to market debit cards and other products to college students. Consumer advocates, federal agencies, and lawmakers increasingly have questioned these arrangements, which often involve financial firms paying colleges to offer school-branded dual ID/debit cards or separate debit cards that students use to access their financial aid. The partnerships provide colleges with an additional source of revenue and give financial institutions access to potential new customers. The terms of the agreements, however, should be made public, says Consumer Financial Protection Bureau (CFPB) director Richard Cordray.
The agency on Dec. 17 said that a bank's failure to disclose such arrangements could be perceived as an increased risk to consumers, which then could up the odds that the institution would come under greater CFPB scrutiny. Agency officials will begin to formally ask financial institutions about the transparency of their deals with colleges next year, according to a blog post by CFPB Student Loan Ombudsman Rohit Chopra. A survey of college officials found that the details of 69 percent of debit card arrangements are already available to the public, but Chopra noted that they may be difficult to get without filing an open-records request under state law.