News

CFPB announces debit card, bank account programs for college students

Richard Cordray

Richard Cordray

The CFPB announced on Thursday that it would examine bank accounts and debit cards geared towards college students in order to determine if the products and services pose any threat to college consumers.

“The bureau wants to find out whether students using college-endorsed banking products are getting a good deal,” CFPB Director Richard Cordray said, The New York Times reports.

The 2009 Credit CARD Act prohibits banks from using aggressive techniques to market credit cards on college campuses and requires all agreements made between universities and credit card issuers to be made public. The CFPB, however, said that little is known about university-affiliated bank accounts and contracts between banks and schools to disburse financial aid.

Many students receive financial aid in excess of tuition and are allowed to use the money to purchase school-related items, such as a backpack or books. Banks can provide students a debit card, linked to an account, to distribute the funds to the student. Some schools even issue university ID cards that can also be used as debit cards, according to The New York Times.

Some credit card providers have been the subject of criticism due to the high fees charged for using the card. Higher One, a big marketer of student debit cards, settled allegations last summer by the FDIC that it imposed excessive overdraft fees to consumers.

Rohit Chopra, the agency’s student loan ombudsman, said that students already under financial stress do not need the added fees.

“We want students to know they can, and should, shop around,” Chopra said, The New York Times reports.

Comments are closed.