Students

College is a time when many of us signed up for our first bank account. Often schools set up agreements with financial companies to offer cards and accounts to their students. Today, some students can use their student ID card to pay for everything from washing a load of laundry to shopping online.

With credit cards, financial companies have to publicly disclose these types of agreements with schools. However, we know less about these arrangements when it comes to other things, like debit cards to access your student loan funds and student checking accounts. We’ve heard from students that sometimes these arrangements are a convenience, while other times we’ve heard that they didn’t feel they had a choice. We want to see if students are getting a good deal and what schools can do to help them through the process.

That’s why we need your help. We want to hear about your experience with financial products designed for college students.

Email us at CFPB_StudentsFedReg@cfpb.gov by March 18 to tell us about any aspect of your experience .

Today, we’re launching an initiative on student cards and bank accounts and we want your input. We’ve published a Notice and Request for Information Regarding Financial Products Marketed to Students Enrolled in Institutions of Higher Education in the Federal Register. The title might sound a little formal, but the reality is simple: we want to hear from you.

We’ll use your comments to work with school officials on ways they can make sure that schools and students are getting off on the right foot when it comes to managing their money during college. We’ll also publish a summary for everyone who contributes and let you know how you can continue to help make sure the market is working for everyone.

Tell us your two cents today, and learn more about the CFPB’s work for students.

Americans owe more than a trillion dollars in student loan debt. That’s more than we owe on credit cards, more than we owe on car loans – and it’s still growing.

So, if you’re going to invest in a college degree, we want you to choose the best deal for your situation. Here at the CFPB we’ve been doing extensive research these last few months. We talked with students and sat down with high school guidance counselors to find out how students make choices about how to pay for college.

We found some recurring themes: Students are overwhelmed with options and aren’t sure how to compare them. In the absence of apples-to-apples comparisons, they’re left to their own devices when making a choice that will have significant consequences for their financial future.

So, what to do about it?

We interviewed financial experts, lenders, policy wonks, and thousands of people like you. You tried our pilots and gave us great feedback – including the fact that this stuff is not easy to figure out — and we heard you.

We’ve distilled the things students said they wish they had known, what experts recommend, and what our pilots have told us could save you money into a set of tools to help you navigate the noise, and to support you every step of the way.

Highlights include:

Choosing a loan

We answer the questions we heard over and over from students trying to figure out how to choose, and offer three steps that can help you get the right loan for you.

Comparing financial aid

When student aid offer letters start arriving from colleges in the spring, you’ll be able to use this tool to make an apples-to-apples comparison between options. A previous pilot of this tool included more automated data, but it didn’t always reflect individual situations accurately. We’re hoping it works better with your personalized offers in hand.

Managing your college money

You’re not going to get the best deal if choosing your first bank account is sandwiched between your first week of classes and your first collegiate meal of instant ramen. This guide will help you plan to get settled financially before you even get to campus.

Repaying student debt

You’ll get a personalized recommendation based on every repayment scenario, whether you’re active-duty military, behind on your loans, working at a non-profit, all of the above, none of the above, or something else entirely.

Real talk

This set of tools is in beta. Which means the tools can only get better from here. But they can only get better if you tell us: Are there parts of this that are hard to use? Did you find jargon you don’t understand? Or, did you find something you’d never heard of before? Did we miss something? Would this help you know what to tell your kid sister about paying for college if she was just starting to look at schools? Let us know!

Cross posted from the Department of Education. We were proud to work with the Department of Education on this Know Before You Owe Project.

By Arne Duncan

I am pleased to announce that more than 500 colleges and universities (.xls), enrolling more than 2.5 million undergraduate students (thirteen percent of all undergrads), have committed to adopting the Financial Aid Shopping Sheet during the 2013-2014 school year.

The adoption of the Financial Aid Shopping Sheet is a big win for students already attending these institutions and those who are considering enrolling. The Shopping Sheet provides a standardized award letter allowing students to easily compare financial aid packages and make informed decisions on where to attend college. Students and their families now have a clear, concise way to see the cost of a particular school.

The Obama administration introduced the Shopping Sheet in July, and to coincide with the release, I sent a letter to college and university presidents asking them to adopt the Shopping Sheet as part of their financial aid awards starting in the 2013-14 school year.

I applaud the institutions that have agreed to adopt the Shopping Sheet, and hope more colleges and universities follow their example in offering students and families an easy-to-read award letter that delivers the bottom line on college costs.

Learn more about the Shopping Sheet here, and, if you’re an institution interested in adopting the Shopping Sheet for your students, or have questions about adopting it, please contact ShoppingSheet@ed.gov.

Arne Duncan is Secretary of Education.

Recently we released the 2012 Annual Report to Congress on College Credit Card Agreements, as well as a database where you can read individual agreements. The report shows that the majority of college credit card agreements are between issuers and affiliated organizations, such as fraternities, sororities, alumni associations, or foundations affiliated with or related to an institution of higher education.

Why do you collect this information?

Section 305 of the CARD Act requires that we collect information on agreements between universities (or organizations affiliated with universities) and credit card issuers that provide for the issuance of credit cards to college students as well as alums and other affiliated people. Issuers must submit the terms of any agreements they have with universities as well as data on the number of accounts covered by the agreement that were open at year end, number of new accounts opened in the calendar year, and payments made by the issuer to the university as part of the agreement, among other information. Previously, the Federal Reserve collected this information, and on July 21, 2011, the Consumer Financial Protection Bureau assumed this responsibility.

What does the data show?

From 2009-2011, the number of agreements, total number of accounts open at year-end, amount of payments by issuers to the university, and number of new card accounts opened during the year all declined. FIA Card Services, N.A. (“FIA”), a subsidiary of Bank of America Corporation, submitted 633 agreements, which represents nearly 80 percent of all agreements in effect during 2011.

In addition to monitoring college credit card agreements, we are also are monitoring the market for other student financial products. Learn about student aid disbursement cards and how to navigate managing your money for college at consumerfinance.gov/Students.

Choosing your first bank account is an important decision. Unlike that first school ID photo, your first banking relationship could last long after you graduate. Making a smart decision now will mean fewer surprise fees that can add up later.

Get started

1. Choose an account as soon as possible. You should try to find an account before you start school. Don’t feel limited to only the banks or credit unions that have ATMs on or near campus; some will automatically reimburse fees for using any ATM. Consider accounts that offer services like remote check deposits, mobile apps, and online bill-pay. Signing up for a bank account now can save you headaches later, and researching accounts with the lowest fees can save you money.

2. Avoid paying unexpected fees. Dig deeper when accounts are marketed as “free” or “easy” – very few accounts charge no fees at all. Does your bank charge monthly fees? Many require minimum balances or regular direct deposit to avoid monthly fees. What about out-of-network ATM fees, overdraft fees, fees to use your debit card, and fees for services like online bill-pay? Knowing if and when fees will be charged could save you hundreds of dollars in fees each year. While half of young Americans never overdraft, the other half average approximately seven overdrafts a year. Overdrafts can cost more than $30 each, so that’s potentially a lot of money taken out of your pocket.

3. Sign up for direct deposit as soon as possible. Once you have a bank account, sign up for direct deposit with your school before classes start. If you are expecting money from your financial aid office, you’ll often get it faster this way – it can be weeks before the school gets to writing you a paper check.

Choosing a bank account

You have many bank accounts options. Here are are three possibilities and key factors to compare when making your decision.

	Virtual checking accounts	Student checking account	School-affiliated banking services
How it works	Some financial institutions provide exclusively online banking services that are comparable to a traditional checking account	Some banks and credit unions offer student checking accounts with discounted fees to establish long term relationships with new customers	Many colleges have a bank they partner with to offer students campus affiliated checking accounts or prepaid debit cards
Benefits	May waive or reimburse ATM fees, even those for out-of-network ATMS Often include online banking and bill-pay Often have mobile apps for things like remote check deposit Often won’t let you overdraft your account	Free access to in-network ATMs May include online banking and bill-pay Access to traditional in-person bank branches	On-campus branch locations and ATMs May include online banking and bill-pay May offer discounts at local or campus businesses Sometimes your student ID card can be used to access your money
Risks	Generally do not have in-person customer service options	Possibly charge monthly maintenance fees – up to $12 a month in some cases – if you don’t meet the minimum balance or the bank’s other enrollment criteria, like maintaining a full-time enrollment status at school May charge more than $30 per overdraft, which can add up quickly, especially if you opt in to coverage for ATM and debit card overdrafts	Could charge fees every time you use your debit card Don’t always provide the ability to write checks May charge inactivity fees each month for not using your account frequently Possibly charge monthly maintenance fees – up to $12 a month in some cases – if you don’t meet the minimum balance or the bank’s other enrollment criteria, like maintaining a full-time enrollment status at school May charge more than $30 per overdraft, which can add up quickly especially if you opt in to coverage for ATM and debit card overdrafts

Accessing your financial aid

After your school takes out the cost of tuition, fees, and any on-campus living expenses from your total financial aid award, there is often money left for you to use for other expenses, like books. You normally have several options for how you get that money, including direct deposit to a bank account, to a card that might also double as your student ID, by check, or cash.

We recently published an advisory to consumers about financial aid disbursements, and we encourage you to choose your disbursement option wisely. They all have benefits and risks, so the most important thing is that you understand your needs and what potential fees you will be charged to use each option.

	Direct deposit to personal account	Paper check	Financial aid disbursement account
How it works	Once you choose the best bank account for you, share that information with your school, and they will deposit additional aid funds directly to that account	Schools generally must offer a paper check or cash option no later than 14 days after the funds are available	A school may partner with a bank or another third party to handle financial aid disbursements The most common option is a debit card attached to bank account that has your financial aid deposited in it You are not required to use the bank chosen by your school
Benefits	You can pick an account that offers what you need and charges few or no fees You can access the disbursement quickly with direct deposit	You can deposit your money into the account of your choice and do not need to provide additional personal financial information	Often the quickest way to access to your disbursement if you haven’t already provided your school with direct deposit info
Risks	No significant risks	If you use a check casher, they may charge as much as 4% of the check amount You may not be able to access your funds immediately after making a deposit	The school makes the agreement with the bank, not you You won’t be able to shop for a low-cost product, and these cards and accounts may come with fees you could avoid by shopping

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The Consumer Financial Protection Bureau is issuing a consumer advisory today to all students expecting to receive scholarship and student loan proceeds onto – what appears to be – a school-endorsed debit card. We are also asking consumers to tell us about their experiences getting their financial aid funds.

Yesterday, the Federal Deposit Insurance Corporation, another banking regulator the CFPB works closely with, fined one of the largest providers of campus debit cards.

Many college students, especially those enrolled in community colleges or who live off-campus, receive scholarships, grants, and student loans that are for more than the cost of their tuition. These funds help them pay rent, get to and from school, and cover other costs, like textbooks. Many schools work with third-party financial companies to disburse these funds directly to students. Consumers should remember the following:

• You can’t be required to use a specific bank or card. There may be a financial institution that operates on your campus, but you generally can’t be required to use a specific account or card to access your student aid. If you have received a federal student loan, your school must provide a paper check or cash option.
• Consider choosing an account before arriving at school. Shop around, and don’t feel limited by the banks operating ATMs on or near campus. Some financial institutions don’t charge you for using any ATMs, and some will automatically reimburse you for fees charged for using an out-of-network ATM. Many institutions also provide a mobile phone app to remotely deposit paper checks.
• If your school offers it, sign up for direct deposit as soon as possible. If your school offers direct deposit, you may be able to provide the school with your account information in order to access your funds more quickly.

If you have a specific problem with your student checking account and need to resolve it, please file a complaint with CFPB. If you want to just share your experience with student checking accounts and debit cards, tell us your story and use the tag “financial aid.” We’ll also share what we learn with the Department of Education, who recently published a notice on this topic.

Ask CFPB if you have more questions about student checking accounts.

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