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University of Minnesota deal with TCF Bank makes students easy marks

Between the University’s Twin Cities and Duluth campuses, the TCF Bank made more than $620,000 in card fees last year.

Between the University’s Twin Cities and Duluth campuses, the TCF Bank made more than $620,000 in card fees last year. Elizabeth Flores, Star Tribune

TCF Bank promises University of Minnesota students that its debit cards are “simple” and “easy.” They link to U Cards, which deposit financial aid. They have banking locations and ATMs all over campus, bedecked with signs that say “The Official U Card Bank” and “OPEN A SAVINGS ACCOUNT TODAY.”

It’s no wonder 44 percent of the school's students  have TCF accounts. 

But a recent report by the U.S. Public Interest Research Group found that may be a better deal for the U and the bank than it is for students. The average student pays $22 a year in fees to TCF, including overdraft fees and charges for inactive accounts. Between the University’s Twin Cities and Duluth campuses, the bank made more than $620,000 in card fees last year.

The University isn’t pushing TCF’s debit cards because they’re better for students. It’s doing it because of a $1.6 million marketing agreement with the bank, which allows it to have all those on-campus locations and ATMs. Every time a student opens up an account with TCF, the University gets $37 in royalties.

In fact, the report found that these kinds of deals struck between schools and banks are often beneficial to everyone except the students. The banks use them to get direct access to “largely low-income populations.” Students at schools with these kinds of agreements pay more than twice in bank fees on average than their peers. They’re also, in general, less protected financially.

At first glance, $22 a year may not seem that bad. In fact, as Research Group higher education director Kaitlyn Vitez told the Minnesota Daily, many of these students ended up paying only a few dollars in fees last year. But others got hit with hundreds. According to the U.S. Department of Education, Minnesotans already owe a combined $27 billion in educational loan debts.

So, why would the university offer its students as easy marks to a bank? A statement from the university didn’t frame it that way. It said students “benefitted” from the partnership “for nearly 25 years” through “supporting scholarships, diversity initiatives, and career planning programs,” and that it “meets” and exceeds “every legal standard for consumer protection.”

“The University appreciates its longstanding partnership with TCF, which has positively affected the lives of many students,” it said. A spokesperson from TCF said its student clients "incur [overdraft] fees less frequently" than clients not affiliated with a school, and that all fees are "clearly disclosed" when students open accounts. 

But the reason many schools gave the Washington Post for buddying up with banks is a sad one: They are also strapped for cash.

“Other schools said the money they receive from financial partners has become an integral part of their operating budgets,” the Post wrote. “Especially as states trim education appropriations.” In Michigan, Grand Valley State University got $230,000 from PNC bank for adding 2,500 new campus accounts. Much of that revenue went straight to the school’s athletic program.

Grand Valley spokeswoman Mary Eilleen Lyon told the Post that it’s up to students whether they sign on with PNC, but consumer advocates say these endorsements present a “troubling” conflict of interest.

TCF is far from the only bank targeting students. At least 1.1 million U.S. college students have campus-sponsored debit cards, and they paid nearly $25 million in fees last year.

TCF is also far from the worst offender. That honor goes to Wells Fargo, which earned $11.3 million by charging students an average of $45 in fees.