Dive Brief:
- The Consumer Financial Protection Bureau is proposing a scorecard that colleges and universities would use when negotiating agreements with banks to promote debit and prepaid cards for students.
- The scorecard would ask for a clear description from the banks of fees that students would pay, the banks’ marketing practices, an estimate of the banks’ revenue from the student cards, and a summary of the fees the banks would collect annually, the Washington Post reports.
- The schools’ use of the scorecard would be voluntary.
Dive Insight:
The bureau’s intent is to prevent banks from swindling students with high fees, but it also should provide a wake-up call to higher education institutions that must have an inkling of how the banks are profiting from agreements that pay the schools millions of dollars. The University of California has already agreed to use the scorecard.
About 40% of the students at U.S. colleges and universities attend a school that promotes campus-branded cards. Two sample bank contract agreements: The University of Iowa has a bank-card contract that pays it $191,379 a year, plus a $125,000 signing bonus for the five-year contract and a $50,000 annual bonus, while Ohio State University’s bank card agreement pays it $25 million over 15 years, plus $100 million in loans and investments.
