Regulating college-bank relationships

The Feds should restrict the subtle ways universities influence college students’ banking decisions.

Strong relationships between banks and universities seem to be an increasingly common sight on college campuses.

The University of Minnesota’s partnership with TCF Bank is clear to every first-year student who goes through orientation. Several other Big Ten schools have similar banking relationships and allow students to link their personal checking accounts with their student identification cards.

Federal government officials are wary of the relationships between banks and universities, and last week, the Minnesota Daily reported that a recent U.S. Government Accountability Office report looked at a sample of large universities in the country. It recommended that institutions make their contract information more public so students can make an informed, unbiased decision about where they do their banking.

The University already discloses some details about its partnership with TCF, and a University statement said that if the government required more transparency between students and University-endorsed debit cards, the school would make those changes.

The U.S. Department of Education recently proposed limits on how universities market debit cards to students. We would like to see more regulations specifically tackle the way that orientation leaders may confuse freshman or transfer students into thinking that a TCF Bank card is required. The Minnesota Daily reported in September that “each active U Card attached to a TCF account was assigned a value of $34 in 2013.” With this monetary sum in mind, it’s clear that the vulnerability of new students at orientation plays into the hands of TCF and the University.

Providing promotional items to students who sign up with TCF may be harmless, but the University can be confusingly pushy in other ways.

The Department of Higher Education will likely draft restrictions before next year, and we hope they include rules that work to keep universities from taking advantage of students in less obvious but more serious ways.