Alert August 21, 2012

CFPB Issues Student Loan Advisory on School-Endorsed Debit Cards

The CFPB issued a consumer advisory to all students regarding the use of school-endorsed debit cards for the receipt of scholarship and student loan proceeds. Noting the recent FDIC consent order against a student debit card provider (see “FDIC Imposes Civil Money Penalties for FTC Violations Arising from Student Debit Cards” article below), the CFPB cautioned students against being forced to use the debit cards and/or using a certain financial institution with which the college or university has a relationship. According to the CFPB, federal law requires colleges and universities to provide students with an option to receive the scholarship and/or loan proceeds in paper check form or cash.