College-sponsored bank accounts and other financial products offered on campus often have high fees, limited consumer protections, and undisclosed terms, according to a study by the Consumer Financial Protection Bureau.  

In an analysis of 500 marketing deals between colleges and large banks, the agency found that many of them don't prohibit potentially abusive account fees, which could result in students paying hundreds of dollars per year in overdraft fees alone, not to mention monthly maintenance fees and out-of-network ATM fees.

“Colleges across the country continue to make deals with banks to promote products that have high fees, despite the availability of safer and more affordable products,” says Seth Frotman, the agency's student loan ombudsman. “Students shouldn’t get stuck with the bill when their school inks a deal for an account that’s not in their best interest."

The agency has sent letters to 17 schools, warning them to disclose their marketing agreements as required by regulations adopted in 2015.

Financial firms are increasingly marketing banking products on campus. The CFPB says there are now more than 10 million students attending a college or university that has a joint marketing agreement with a financial company. The products include prepaid cards and bank accounts marketed with the college logo and sometimes linked to the student's ID card.

It’s a mutually beneficial relationship. Colleges may get a share of the revenue generated from products and financial services, and companies get access to a fresh pool of potential customers. 

“Campus banking products shouldn’t be a financial windfall for colleges at the expense of students,” says Suzanne Martindale, a staff attorney at Consumer Reports, who found many of the same practices when she lead a Consumer Reports investigation of campus banking products in 2014. 

From Credit Cards to Bank Accounts

Many colleges also have agreements to co-sponsor credit cards for students. But since new consumer protections were instituted for campus credit cards in 2009, the number of credit card agreements has dropped. Banks have shifted the focus of marketing partnerships from credit cards to college-sponsored bank accounts.

In October 2015, the Department of Education instituted new consumer protections for college-sponsored bank accounts to increase transparency and provide safeguards for students, such as access to a large network of free ATMs.

But despite the new regulations, the CFPB investigation found that colleges continue to market products that have costly account fees and make it difficult for students to find out the true costs.

Even though it’s required by law, many colleges don’t publicly disclose marketing agreements, says Martindale, who last year investigated how difficult it was for students to get information on credit card contracts at universities.

Protect Yourself From High Account Fees

  • Get banked. Check out local banks and credit unions near campus to see what they offer. Many of them have products for college students that have low account fees and reimburse you if pay a fee at an out-of-network ATM.
  • Avoid fees. If you do open a college-sponsored bank account, find out what kind of fees you may be charged for monthly maintenance, ATM use, and overdrafts. Know which ATMs on campus are in your network and which are free. Be aware that some accounts charge for checking your account balance at an ATM, so check online instead. Sign up for email or text messages that alert you to low-account balances to help you avoid overdrafts. Think before you opt in to “overdraft protection” plans on point-of-sale or ATM transactions. Overdrawing by just a couple of dollars could cost you another $35, on average.
  • Know where to get information. Your school should have information posted online about campus accounts. If you have a college-sponsored credit card, you can look up the terms of the marketing agreement between colleges and financial institutions in a public database that the CFPB unveiled in September. If you can’t find information, contact your school’s bursar or financial aid office. You can also submit a complaint to the CFPB at consumerfinance.gov/complaint.

For more advice on how to manage money on campus, check out this guide from the CFPB.