When colleges and universities partner with banks to offer their students checking accounts, it's logical to assume the schools made an effort to negotiate a good deal. There's a good chance they didn't, say consumer advocates.
These accounts typically come with a debit card that prominently displays the school logo. It's easy to see how that could be viewed as an endorsement by the school, especially when the card can be used as student ID. It's just good old-fashioned marketing, however.
A new report, Overdraft U, from the non-profit Center for Responsible Lending (CRL) found that these college-bank checking accounts "offer few benefits" to the students who use them.
"These accounts are not any better than what a student could find on the open market, and in many cases, they're worse," said Maura Dundon, a senior policy analyst who co-authored the report.
The banking industry insists that's not the case. The American Bankers Association (ABA) says campus banking represents "a mutually beneficial partnership among banks, universities and students." It says students often do better with campus bank accounts that those found off campus.
The CRL report looked at campus checking accounts where the bank had an exclusive agreement with the college or university. Hundreds of schools across the country have them. The bank gets a ready pool of new customers and the school often makes money on the deal. It could be revenue-sharing based on the number of accounts opened or free services from the bank, such as managing the school's financial aid disbursements.
Young adults are more likely to overdraw their checking accounts and the CRL study found that many college-bank partnership accounts allow for $100 or more in overdraft fees in a single day. These fees could be incurred before the student knows there's a problem, the report said.
"We question the cozy relationship between the banks and the schools that result in bank accounts with harmful fees," Dundon told NBC News. "Schools are failing to take full advantage of their bargaining power to best serve the interests of their students."
The nation's bankers don't believe there's a problem and they question the CRL's conclusions. (READ: ABA Backgrounder: Campus Banking Products)
"They're trying to make it sound as if there's a difference between a campus account and a non-campus account, but there isn't," said Nessa Feddis, Vice President and Senior Counsel for the ABA. "The accounts are identical. The only difference between a campus account and a non-campus account is that the monthly fees are lower and they may pay less at an ATM."
Banks offer their services to students -- often at a loss -- in order to build a long-term financial relationship, but students are not required to link their ID cards to the bank account offered by their school, the ABA says.
Consumer groups strongly believe college and university administrators have a responsibility to watch out for their students and this includes their financial welfare.
"If schools are going to enter into these deals, they should be able to deliver a far superior deal to their students," said Chris Lindstrom, director of the U.S. Public Interest Research Group Education Fund. "And in fact, what we've seen over and over again is that students are getting the same kind of deal, if not worse, than what's available in the off-campus market."
"We agree that we could do better," said Barmak Nassirian, director of federal relations and policy analysis at the American Association of State Colleges and Universities. "It's not for lack of caring. We are very receptive to change, if there are practices we should take a look at."
Campus checking accounts and debit cards are provided as a convenience to students, Nassirian told NBC News. And those who negotiate these deals aren't necessarily financial experts.
The Consumer Financial Protection Bureau (CFPB) is considering steps to better protect college students who use campus checking accounts.
The CFPB is developing a "Safe Student Account Scorecard" designed to help colleges "avoid partnering with financial institutions that offer checking and prepaid accounts with trips and traps." The idea is to provide school administrators with the questions to ask - about fees, features and sales tactics - to help them negotiate "safe and affordable" banking products for their students.