Federal Lawmakers Ask Banks to Explain Lucrative Ties to Colleges

A group of Democrats in Congress wants to know if lucrative relationships between colleges and major banks are driving students further into debt.

In a letter on Thursday addressed to nine major financial institutions, seven members of the House of Representatives and the Senate requested details about the arrangements, which typically entail banks’ paying colleges for access to students in order to sell them products. A common method is by linking students’ debit accounts with their college IDs. In some cases, students have been assessed fees to get access to their own student-aid funds.

In the letter, the legislators ask the banks how much money they pay colleges for marketing rights, whether they have presented gifts to colleges as part of marketing strategies, and how many accounts have been opened with the banks as a result of arrangements with colleges, among other things.

The letter refers to an ABC News investigation, broadcast this month, and a report last year by the U.S. Public Interest Research Group, both of which focus on fees levied on students through the arrangements.

“Numerous recent reports raise new concerns that financial institutions are once again going after college students and offering colleges financial incentives to hand over the keys to the campus,” says the letter. “It is unfortunate to see that some institutions haven’t learned from past missteps and are repeating these troubling practices.”

The Consumer Financial Protection Bureau, a federal watchdog agency, published a notice this year seeking information about banks’ relationships with colleges. It will present its findings at a forum on Monday.