The University of Minnesota collects more than $1 million a year helping a Minneapolis-based bank recruit its students as customers.
Around 85 percent of incoming UMN freshmen open a TCF account, according to ABC News, and the university nabs bonus payments of $34 for each student that opens an account. In addition, incoming freshmen are given university branded T-shirts with the TCF logo on the back, and students who deposit more than $50 are promised a free UMN sweatshirt.
UMN confirmed the $1 million figure to The Huffington Post, but disagrees that students are lured into TCF Bank accounts.
The agreement with TCF started in 1995, university spokesman Chuck Tombarge told HuffPost. It requires a minimum of $1 million to be paid annually to UMN, and the university only collects more if the number of students opening a bank account, multiplied by that $34 bonus, exceeds $1 million. That happened once, in January 2013, when the university collected an extra $415 beyond the million dollars, Tombarge said.
"While there may be some existing business arrangements across the country that negatively affect students, the U of M’s relationship with TCF Bank is not one of them," the university said in a separate statement.
The university noted that aggressive marketing is prohibited, and students have the choice of where to bank. They also are eligible for free checking and no minimum balance for TCF student accounts. UMN said the money earned from TCF is reinvested through scholarships and helping to pay for homecoming.
These types of agreements between universities and banks are currently under review by the Consumer Financial Protection Bureau, which started an investigation in January. CFPB has not condemned the arrangements, but director Richard Cordray said the agency "wants to find out whether students using college-endorsed banking products are getting a good deal."
A UMN spokesman said the university has not received an inquiry from CFPB or any members of Congress about its arrangement with TCF Bank.
The University of Illinois at Urbana-Champaign told HuffPost it receives about $400,000 annually from TCF Bank, but some of that money is directed toward scholarship funds for students. Typically half of all incoming freshmen open an account with TCF at the Urbana-Champaign campus.
The University of Michigan also has an arrangement with TCF, but was not able to provide the amount it receives annually to HuffPost by Friday afternoon.
The U.S. Public Interest Research group said in a 2012 report that UMN was the largest public four-year institution with a financial card arrangement with TCF. Five schools have arrangements with TCF, representing a total of 179,557 students and $274.3 million in campus deposits as of 2012.
The concern regarding these types of financial card agreements is how they are marketed. Consumer advocates worry that banks may boost profits and accounts off of advertising that appears to have the endorsement of colleges.
"While consumer protection isn’t part of the job description for the college administrators negotiating these deals, banks have every incentive to sock student consumers with hidden fees that are hard to avoid," said Chris Lindstrom, higher education advocate for U.S. PIRG.
The TCF cards at Minnesota "serve as a school identification card, ATM/debit card, library card, security card, health care card, phone card and stored value card for vending machines or similar uses," U.S. PIRG's report explained. "TCF is ranked 5th largest in number of campus card banking relationships in the U.S. On December 31, 2011."
But Tombarge he insisted the cards are not used to take advantage of students.
"Not only are we not the only university with this sort of agreement, but in many respects, we feel our agreement does the utmost to keep our students' interests in mind," Tombarge said.
CFPB's review is expected to be released in September.
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