Huffpost Business

Banks Sneak Back Onto The College Campus: Seven And A Half Things

Posted: Updated:
Banks have managed to weasel their way back onto the college campus to extract new fees from students.
Banks have managed to weasel their way back onto the college campus to extract new fees from students.

Thing One: Back To School: It's like Old School, only with fewer laughs and more financial ruin: Banks have snuck back onto college campuses to once again milk students of their money.

A few years back, in response to a public outcry, Congress chased banks away from colleges like Jesus running the money-lenders out of the Temple. New laws prohibited banks from luring students into signing up for costly credit cards with cool swag and from signing pacts with colleges to push students into particular loans. But banks always find a way, don't they? A new report by the United States Public Interest Research Group Education Fund suggests banks have weaseled back into students' lives, signing deals with colleges to give students debit cards that function as school IDs and taking over student-loan disbursements -- of course extracting fees in the process.

These banks and financial firms, including some outfit called Higher One, (that HuffPost's Loren Berlin first wrote about in early May) are providing valuable services to the students, claim the banks and financial firms. And they apparently do help colleges defray some costs, which savings may or may not be passed on to the students. But banks and financial firms are not doing this as charity work. The New York Times writes: "Consumer advocates worry that financial firms are again profiting from unsuspecting students, by charging them fees and even gaining access to their financial aid funds." Report author Rich Williams was more blunt: “For decades, student aid was distributed without fees. Now bank middlemen are making out like bandits using campus cards to siphon off millions of student aid dollars.”

Thing Two: Toward A More Perfect Union: It only took two years of perpetual panic, but Europeans are finally starting to talk seriously about forming a stronger financial union to protect against future crises. Ireland votes today on a fiscal pact proposed back in January. And the European Commission on Wednesday proposed a banking union that would pool money to help struggling banks. Such a union would provide immediate relief to Spain, for example, which just this week had to bail out Bankia and whose own borrowing costs are soaring because of the fear that more bailouts will be needed. But you'll never guess who's standing in the way! Actually, you'll guess: It's Germany, which wants no part of a fiscal union like that. It will probably eventually get dragged into one, but only after several more months of crisis. Meanwhile, Europe still has to figure out who's going to be on the hook for bailing out Spain, while financial markets are once again in chaos while we wait for Germany to come around. The risk, as the Wall Street Journal highlights, is that Europe's financial and political ties get so worn down by the rolling crises that it flies apart altogether.

Thing Three: More Facebook Fallout: Facebook's disastrous IPO was like a neutron bomb to the IPO market. Yesterday discount travel website Kayak delayed its IPO, in part because of the nightmarish Facebook debut. And the calendar is nearly empty of future offerings, DealBook writes. "Not all initial public offering troubles can be pinned on Facebook. Europe’s economic woes have worsened and investors are seeking safety, not the risk of new stock issues from companies with little public track record. Still, Facebook, by failing to instill confidence among investors and executives, has made a weak market weaker."

Thing Four: Sold In May, Went Away: Between the Facebook faceplant, the European crisis and an apparent slowdown in the U.S. economy, this has been an awful month for the U.S. stock market. The Dow is on pace for a 6 percent drop in May, the Wall Street Journal writes, which would be the worst single month since May 2010, the month of the Flash Crash and the true kick-off of the European debt crisis. Feels like only yesterday, because yesterday was pretty much like that, too. The stock market's pain is the bond market's gain, as safety-conscious investors have poured into U.S. Treasurys, driving 10-year note yields to a record low.

Thing Five: Indian GDP Stumbles: India this morning reported that its GDP growth slowed drastically in the first quarter, to 5.3 percent, from 9.2 percent -- the kind of shift that would feel like a deep recession if it happened here. The Financial Times writes: "This is the worst performance of India’s economy since 2003 and far worse than the situation in the wake of the global financial crisis and the collapse of Lehman Brothers in late 2008, adding pressure on policy makers to take emergency actions to revive the country’s growth."

Thing Six: Battery Makers Lose Power: Get ready to hear months of complaints about the next Solyndra: Electric-car battery makers. The Obama administration pumped more than $1 billion into these companies to try to kick-start an electric-car industry in the U.S., but the companies have been a giant flop, the Wall Street Journal writes. "The money funded nine battery plants—scattered across the U.S. from Michigan to Pennsylvania and Florida—that have few customers, operate well below capacity and, so far, have created less than a third of the jobs promised by 2015."

Thing Seven: Tangled Web: Google, Microsoft, Verizon and Cisco Systems are teaming up to warn Congress in a hearing today that giving foreign governments more control of the Internet will lead to higher costs and fewer freedoms. The foreign governments argue that leaving control of the Series Of Tubes in the hands of a tiny, little-known American organization, known as ICANN, is unfair.

Thing Seven And One Half: No Shirt, Sherlock: Are you a hipster doofus who loves Mitt Romney? Probably not! But if you are, then Urban Outfitters has the shirt for you, BuzzFeed reports. Just don't wear it around any young children because it has a big, giant potty word on it, for extra coolness, even though Mitt is religiously prohibited from saying it. Also available in Ron Paul, Ron Paul and Barack Obama.

Now Arriving By Email: If you'd like this newsletter delivered daily to your email inbox, then please just feed your email address to the thin box over on the right side of this page, wedged narrowly between the ad and all the social-media buttons. Nothing bad will happen to you if you do, unless you consider getting this newsletter delivered daily to your email inbox a bad thing.

Calendar Du Jour:

Economic Data:

7:30 a.m. ET: Challenger Job Cuts for May

8:15 a.m. ET: ADP Employment Change for May

8:30 a.m. ET: Initial Jobless Claims for the week of 05/26

8:30 a.m. ET: GDP - Second Estimate for Q1

9:45 a.m. ET: Chicago PMI for May

Corporate Earnings:

Nothing much.

Heard On The Tweets:

@justinwolfers: The Euro is the new Facebook.

@ReformedBroker: EU Minister: Facebook bailout is "out of the question."

@maxkeiser: The genius of Zuck. Facebook's IPO was such a disaster competitors can't go public now. Plus, he keeps the extra few billion in cash.

@ObsoleteDogma: For any journo who has resisted using a "Pain in Spain" headline so far, today is probably the day.

@amaeryllis: Unbelievable that Romney spokespeople are seriously saying—not even 5 years after the financial crisis—that we need DEregulation. #lolwut

@_CB01: Gold dogma, lets call it, which 1st commandment is: "Thou shalt have none other indicators before me".

-- Calendar and tweets rounded up by Khadeeja Safdar.

And you can follow us on Twitter, too: @markgongloff and @byKhadeeja

Around the Web

UPDATE: Banks Pitch Prepaid Cards On College Campuses - WSJ ...

Colleges' bank deals saddle students with hefty fees

On Campus, New Deals With Banks

Colleges' bank deals saddle students with big fees