Feb 21, 2013 Missy Rogers
The Consumer Financial Protection Bureau (CFPB) announced it is investigating trends in credit cards and other financial services marketed to college students just one week before New Jersey Governor Chris Christie made direct sales of consumer credit accounts illegal at all public colleges in the state.
Consumer advocates curious about college trend
Alternative credit products are the main topic of curiosity for the CFPB. The organization says information about companies offering financial services and bank accounts affiliated with universities is lacking in the industry, especially from the perspective of students and the professionals responsible for creating these types of business partnerships. In places like New Jersey, where related marketing is banned from public campuses, the alternative credit data gathered from school-affiliated financial institutions could help consumer credit data businesses collect information about young people who would otherwise have limited access to credit-building resources.
Richard Cordray, CFPB executive director, said his organization's intention is to make sure adults who are just starting out are not being taken advantage of by unfair practices.
"We have seen many colleges establish relationships with financial institutions to offer banking services to their students," he said in a statement. "The Bureau wants to find out whether students using college-endorsed banking products are getting a good deal."
The CFPB has requested feedback from students, parents, colleges, financial aid disbursement agencies and all other businesses or individuals with knowledge of products marketed to students that would affect credit.
New Jersey bans sales on campuses
Students attending New Jersey public universities will not see the kind of monetary service sales those attending private schools may this year, as Chris Christie signed a law this month to prevent inexperienced college students from signing financially-binding contracts they may not have full understanding of. Debt collection businesses may notice a trend in lower numbers among consumers aged 18-22 in the state over the next few years.
The senator responsible for the new law, Kevin O'Toole, claimed in a statement that preventing certain businesses from preying on college students will strengthen the credit industry as a whole by helping consumers make better-informed decision at the start of their adult lives.
"This law reduces the temptation for students to accumulate large debts at such young ages, to improve their chances of professional and economic advancement," he said.
Fair practicing credit data companies will see fiscally responsible consumers in the future according to the senator - the positive product of college experiences void of businesses like those the law hopes to take down.