The Consumer Financial Protection Bureau is taking a new look into financial products marketed toward students, starting with credit cards. The newly created bureaucracy has been relentless in reforming the credit card market, having first tackled the issue of high fees and complicated repayment terms.
Now the CFPB will seek to better understand the impact of student marketing, especially as it relates to credit cards. The Bureau is seeking public comment on issues such as the amount of information financial services companies share with students, how products are marketed to students, and whether or not the fees are in line with industry standards. The Bureau will also investigate how students are using the cards on campus, and what the schools receive from the card program.
Colleges are a lucrative part of the credit card business. College-branded credit cards provide students with a convenient way to pay while rewarding the college with a marketing fee which is often tied to how often each credit card is used. A common kickback is a small reward equal to .25-1% of all spending by students with a college credit card.
The CFPB certainly won't end credit card access for college students – one must be 22 years old or have sufficient income to get a credit card at 18 – but it could restrict how credit cards are marketed to students. For some, a credit card is a responsible way to build a credit score – just another part of participating in modern finance. For others, credit card debt grows out of control. The CFPB hopes to discover how it can create more younger responsible credit card users by listening to public comments until March 18, 2013.