The Consumer Financial Protection Bureau has announced that an inquiry will be initiated to establish the different aspects of financial products being marketed on campus.
In 2009, financial companies were restricted from using certain marketing techniques on college campuses by the Credit Card Act.
The Consumer Financial Protection Bureau has recently found it necessary to look into the other financial products that are offered to students on college campuses to confirm that students who use the financial amenities are being offered the best deals.
Iowa State has continued to fit the conditions of the Credit Card Act, but there is concern that if the act changes, it may affect Iowa State.
The only on-campus organization that is correlated with credit cards is the ISU Alumni Association.
According to an agreement contract between the alumni association and MBNA American Bank, the association has been partnered with MBNA since 1995. This agreement has been amended multiple times since its birth, including after the Credit Card Act of 2009.
Jeff Johnson, president of ISU Alumni Association, commented that “the 2009 CARD act certainly provided a lot more transparency within the industry. However, the majority of college students still have a credit card and graduate with too much credit card debt.”
He went on to add that the Bank of America stopped promoting the ISU credit card to students in 2008. At that time, only about 1 percent of the student body was actually made up of active cardholders.
The main concerns with the Consumer Financial Protection Bureau inquiry are the alumni association’s credit card use and Iowa State’s relations with U.S. Bank.
If the Credit Card Act is changed or the Consumer Financial Protection Bureau puts more regulations on colleges’ and college organizations’ relationship with credit cards or banks, the alumni assocation may need to amend their agreement with MBNA once again.
The other ISU program that could possibly be affected by the inquiry is Iowa State’s relationship with U.S. Bank.
The inquiry is looking into any financial program that is offered to the students, parents or professors on campus.
Students are offered the option of making their identification card a debit card as well. Since the option is for debit and not a credit card, this is not an issue regarding the Credit Card Act for now.
“In terms of Iowa State’s arrangements, we are in compliance with all the regulations that exist, and I don’t see any major problems,” said Warren Madden, senior vice president for Business and Financing. “Obviously as this issue is studied or debated by Congress and others as they change the regulations in some fashion, we have to see what those changes are and whether there is any impact.”
The main concern of the Consumer Financial Protection Bureau is how financial institutions are affecting students on campus. U.S. Bank is the only bank that is available for use of the joint debit-ID card and has ATMs on campus.
Joan Piscitello, ISU treasurer, described Iowa State’s relationship with U.S. Bank as “the best deal we could get for the students.”
The identification-debit card feature has been offered on campus since 1996, while Iowa State has been associated with U.S. Bank for more than 10 years.
There are both pros and cons regarding the identification-debit card feature.
“Being a student, I can see both sides. I think that there is a good restriction, because we don’t need credit companies on a campus,” said Tyler Etten, president of the Financial Club.
Etten also added that he did feel pressured to open a U.S. Bank account at freshman orientation.
Even though students aren’t required to have an account with U.S. Bank, it is the only option offered on campus.
The inquiry is asking for opinions from the public, students, families, the higher education community and financial institutions.