The federal Consumer Financial Protection Bureau released on Wednesday the draft of a “Safe Student Account Scorecard” that it says will help colleges in their negotiations with financial institutions regarding college-affiliated debit cards and other financial services. The scorecard will enable colleges to avoid partnerships with institutions that offer accounts “with tricks and traps,” the bureau said in a news release.
“Because of the influence schools may have on the financial products students choose, we are working to arm them with the information they need to negotiate safe and affordable products for students,” the bureau’s director, Richard Cordray, said in the release.
The scorecard suggests a list of questions colleges could ask banks regarding the fees and features student accounts would carry, and the transparency of information the banks would provide to students.
In separate remarks prepared for a press call with reporters, Mr. Cordray spoke of the need to protect students from some companies’ aggressive marketing practices. The Credit Card Accountability Responsibility and Disclosure Act of 2009 restricts how financial institutions can market credit cards on college campuses, he noted, but the law does not cover student debit or prepaid cards. In the five years since it was enacted, he said, more institutions have turned to marketing debit and prepaid cards instead of credit cards. The bureau’s goal, he said, “is to help students get the best deal available on these kinds of products.”
The bureau invited colleges to comment on the draft scorecard and said it would accept input until March 16.
In February of last year, the Government Accountability Office criticized the lack of information about agreements between colleges and banks, saying too little was known about the fees students were charged and the revenue received by the colleges. A rule-making panel set up by the U.S. Education Department considered new regulations for colleges and banks regarding student accounts last year, but the panel failed to reach a consensus.