Report puts college-bank relationships under fire

Ellen Schmidt

College and university partnerships with financial institutions are convenient for students to bank on campus, but there’s growing concern that they may not have students’ best interests in mind. 
 
A recent report from the Center for Responsible Lending found that many college-financial institution partnerships have overdraft policies that are unclearly marketed, confusing, and costing students extra fees.
 
The nonprofit’s report included the University of Minnesota’s agreement with TCF Bank, because of the school’s high enrollment and because the bank has many partnerships with post-secondary schools nationwide.
 
Maura Dundon, co-author of the report and a senior policy counsel at CRL, said TCF’s wording of its overdraft policy is confusing because it’s labeled “Overdraft Protection Services,” so students may agree to it and think it keeps them from being charged these fees when it’s actually opting them in.
 
But TCF spokesman Mark Goldman said the report did not mention that the bank provides the option to opt out of the fees.
 
“That’s one of the things that the report fails to distinguish — is there an opportunity for the account holder to avoid the fee altogether?” he said. “In the case of TCF, the answer is yes.” 
 
The report also questioned the relationships between banks and schools.
 
The marketing agreements for these partnerships may provide schools with financial benefits, such as a share of the revenue or assistance with financial aid disbursement, according to the report. The agreements are also commonly exclusive, making the banks the only ones allowed on campus. 
 
“Because students are the recipients of billions of dollars of aid every single year, the banks know that, and they want to figure out a way to get in on that flow of aid from the federal government to students,” said Chris Lindstrom, higher education program director at the nonprofit U.S. Public Interest Research Group. 
 
Dundon noted that students may feel pressured into opening an account when they come to school.
 
University freshman Justin Herold-Plakut said he had closed a TCF account before coming to the University but decided to open one again because of the incentives. 
 
“I only renewed my TCF account to get the free sweatshirt,” he said.
 
TCF Bank’s only exclusive aspect with the University is through U Cards. When students receive their card, they have the option to link it with their TCF checking account. Other banks are allowed to market and be present on campus. 
 
TCF also doesn’t give the University assistance with its financial aid disbursement. But the bank pays royalties for student accounts, contributes to scholarship programs and supports campus-wide initiatives. 
 
The U.S. Department of Education is looking into the practices of college-financial institution partnerships and is considering regulations for these relationships.
 
Earlier this year, the Consumer Financial Protection Bureau released the idea for a tool to help colleges decide if these partnerships are beneficial to both themselves and students. The Safe Student Account Scorecard would assesses the fees banks charge students and other safety measures.