Iowa State University partners with U.S. Bank to offer accounts to students. Federal aid remaining after tuition is paid can be deposited into the account and students can use their university-issued identification card as a debit card to access the money. Iowa State receives a “royalty” payment based on the percentage of students and former students who have these U.S. Bank accounts. The school collects about $300,000 per year.
ISU Treasurer Joan Piscitello told the editorial board the school is planning to soon update information given to students to ensure more transparency and disclosure. Written information will make clear that opening a U.S. Bank account is optional, and more information will be provided about the school’s relationship with the bank.
The University of Iowa partners with Hills Bank and Trust Co. to offer students a checking account linked to their university IDs. Though such an account is optional, the mailings and fliers emphasize the benefits of opening an account with this particular bank. In one brochure, students are offered a “free gift with your new UI Student Checking Account.” Parents who may want to deposit money into the student account are instructed to provide a driver’s license, Social Security card and personal bank account information.
While this account may or may not be a good option for a student, it’s definitely a profitable option for the University of Iowa and the bank. In addition to the $125,000 “signing bonus” from Hills Bank, the university receives a percentage of the students’ “swipe fees,” with a guaranteed minimum payment of $50,000 per year. The bank pays the school rent for a branch office on campus and contributes to the cost of the cards provided to students.
According to the contract, the arrangement nets the school more than $1 million over a five-year period. The bank may get a customer for life.