Published On: January 17, 2015
“Safe Student Account Scorecard” that would help colleges to avoid partnering with financial institutions that offer checking and prepaid accounts with tricks and traps.
Helping a client protect important assets before filing bankruptcy has always been seen as appropriate “pre-bankruptcy planning. To quote Ret. Bankruptcy Judge Sarah Curley “it is malpractice not to provide competent pre-bankruptcy counsel”.
Schools look at students as cash machines.
Consumer Financial Protection Bureau (CFPB) is seeking input on a “Safe Student Account Scorecard” that would help colleges to avoid partnering with financial institutions that offer checking and prepaid accounts with tricks and traps. CFPB discloses that many “colleges make deals with financial institutions, where the college helps with or allows the promotion of credit, debit, or prepaid cards, sometimes endorsed with a college logo or linked to a student identification card. Colleges, either directly or indirectly, typically get a share of the revenue generated from the cards, and financial institutions have access to a new group of consumers.
The CFPB has identified agreements where financial institutions offer royalty payments for use of college trademarks or bonuses based on the number of student account sign-ups. Financial institutions may also offer discounted, or even completely free services, in exchange for marketing access on campus.
The behind the scenes reason for this increased scrutiny is that the bankruptcy trustees and their attorneys are hungry. Bankruptcies are down, but their firm and life style were built on earning a very healthy income. Now they are desperate to keep up that same level of income.
The Credit CARD Act of 2009 (CARD Act) restricted financial institutions from using certain types of credit card marketing practices on college campuses and requires that agreements between credit card issuers and colleges be publicly available. But over the past five years marketing partnerships between colleges and banks have shifted from marketing credit cards to marketing student debit and prepaid cards. This form of marketing has now surpassed marketing student credit cards. Forty percent of college students attend schools with agreements between the college and the financial institution to provide debit or prepaid cards. A CFPB analysis of one university system revealed that the school-endorsed financial product received the highest adoption by students receiving financial aid.
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MUSINGS FROM DIANE:
Once again banks and lending institutions look for ways to lock in a student to life changing debts. Please use your common sense when borrowing money with the “hope” that you can repay it in the future. This is gambling with your future and the financial stability of your family.
About the Author: Diane Drain
Diane is a well respected Arizona bankruptcy and foreclosure attorney. As a retired law professor, she believes in offering everyone, not just her clients, advice about bankruptcy and Arizona foreclosure laws. Diane is also a mentor to hundreds of Arizona attorneys.
*Important Note from Diane: Everything on this web site is offered for educational purposes only and not intended to provide legal advice, nor create an attorney client relationship between you, me, or the author of any article. Information in this web site should not be used as a substitute for competent legal advice from an attorney familiar with your personal circumstances and licensed to practice law in your state. Make sure to check out their reviews.*
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You and Jay are the best attorneys I have ever had or needed and thank God for the Honorable Robert Gottsfield in recommending you folks – I would have never made it through the entire process without you and Jay and God Bless you both always and stay in touch as well. You folks are the BEST OF THE BEST in Arizona.
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I can’t say enough good things about Diane. The way she handled my not typical circumstances was amazing. I was very nervous to start the bankruptcy process but Diane just has a very comforting way of explaining the whole process. My only regret is that I didn’t find Diane sooner. If you find yourself in a financial situation that you can’t correct on your own, please Call Diane Drain as soon as possible.
“Filing for bankruptcy can be a stressful life event” R.A.
Filing for bankruptcy can be a stressful life event, and selecting the right attorney can add to this stress. Diane and Jay were a pleasure to work with, and it is obvious that they are passionate about helping people get their life back on track. I would highly recommend them if you need a bankruptcy attorney.
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