On June 30, 2014, Georgetown University earned $240,000 dollars for granting PNC Bank exclusive access to its students. Since then, Georgetown has helped ensure that PNC has the capability to meet its recruitment goals on campus each year, introducing nearly 2,000 freshman to the bank each year during their freshman orientation.
In 2014, PNC replaced Capital One as the on-campus bank at Georgetown University. PNC has not released the number of Georgetown students who have opened a PNC account on campus since 2014, but based on annual company targets, the number could be well over 8,000, according to the agreement between Georgetown and PNC. As Georgetown is making hundreds of thousands from its agreement with PNC, whether the needs of students are taking priority to the university’s bottom line or not remains unclear.
Paid marketing agreements like the one Georgetown entered with PNC make opening a bank account on campus easier than ever, but activists and policymakers nationwide wonder whether this ease is always in the students’ best interest.
Hundreds of campuses across the nation enter into agreements with commercial banks, allowing them access to students with an exclusive presence on college campuses. Some banks elect to enter agreements with just one university, while others enter multiple partnerships nationwide, such as PNC, which has partnered with 27 universities, and Wells Fargo, which has partnered with 24.
PNC’s presence on campus has enabled the bank to become more integrated into the community and serve as a positive resource for Hoyas, according to Marc Fournier, vice president of Auxiliary Services at Georgetown.
“PNC provides a number of resources to the campus community, such as student and workplace banking, as well as financial literacy programs for students, faculty and staff,” Fournier wrote in an email to the Hoya.
Integrating into a college community also provides many benefits for the bank itself, as many students maintain their relationship with their first bank even after they graduate, according to Kaitlyn Vitez, director of the Make Higher Education Affordable Campaign for the U.S. Public Interest Research Group, an advocacy group that utilizes research to petition for progressive causes.
“Students are going to continue to bank with these big national chains, like the PNC or Wells Fargo, for years to come,” Vitez, who co-authored reports on overdraft fees and debit cards from paid marketing agreements, said in an interview with The Hoya.
Aiganym Nurakhanova (SFS ’23), a student from Kazakhstan, began banking with PNC because of its exclusive partnership with Georgetown.
“I opened an account with the PNC because it is convenient, as it’s the only bank right here on campus,” Nurakhanova said.
This dynamic is key to cultivating deep connections with the Georgetown community, according to Richard Bynum, the regional president of PNC for the greater Washington, D.C. area.
“Exclusivity is something you need to build relationships, create commitment to a company,” Bynum said in an interview with The Hoya.
Paid marketing agreements between universities and commercial banks nationwide earn millions for both partners, but at times they can create significant financial hardships for students, according to a 2016 Consumer Financial Protection Bureau report.
Wells Fargo has 24 paid marketing agreements with colleges and universities across the country. Students who banked with Wells Fargo paid an average of $44.84 in fees in the most recently available contract year, and the bank earned over $11 million just from these fees, according to a study by the U.S. PIRG Education Fund — among the highest of all campus debit card providers.
On average, students at universities with paid marketing agreements almost paid almost twice as much in fees on debit cards than students attending universities without these agreements. Many of these fees were overdraft fees, which are charged if an account attempts a transaction over its balance.
PNC’s overdraft fee is $36, and the bank allows four overdraft transactions a day, potentially totaling to an overdraft fee of $144. Accounts are charged a $7 daily fee for the subsequent days they remain overcharged, according to PNC’s student contract.
While a minority of students nationwide pay overdraft fees, the students who rack them up can incur hundreds in charges. In fact, overdraft fees hit younger adults particularly hard, according to a 2016 Pew Charitable Trusts study.
While PNC does not have a record of excessive fees comparable to that of Wells Fargo, the continued presence of overdraft fees still highlights ways the accounts can be improved to meet the needs of students, according to Vitez.
“Is PNC as dangerous of a bank as Wells Fargo is?” Vitez said. “No. But, there is no reason why students should have to pay these overdraft fees at all.”
The relationship and potential earnings PNC can receive from its clients expand beyond the confines of a checking account, and the bank compensates the university for this prime access to its students: PNC pays up to $180,000 a year to the university for its exclusive presence on campus, along with a $240,000 signing bonus in 2014, according to PNC’s contract with Georgetown.
PNC, however, only pays the full $180,000 if the target number of new accounts from students and university employees is reached annually. Last year, the target fell short, reducing PNC’s payment to $147,000, according to Vitez.
If PNC surpasses its recruitment goal, the bank must pay Georgetown a bonus determined by what amount the goal was exceeded, giving the university a financial stake in PNC’s recruitment efforts.
PNC has access to the names, contact information and addresses of all incoming new students. The bank also has the ability to request the university to send advertising material to the home address of any student at Georgetown, regardless if they are incoming or not, according to PNC’s contract with the university.
PNC has not invoked this provision of the agreement, according to Fournier.
“PNC maintains contact information for only students who sign up for PNC accounts, and to date, the University has not provided student contact information to PNC,” Fournier wrote.
The provision’s inclusion in the agreement leaves the potential for invasions of students’ privacy, according to Linda Sherry, director of national priorities Consumer Action, a nonprofit consumer education and advocacy center .
“It is concerning — they know a lot about you,” Sherry said in an interview with The Hoya. “It’s kind of as if the university never asked the students if it was okay to do this.”
While PNC has refrained from using student data of its own accord, colleges and universities with paid marketing agreements have the power to prohibit policies that run counter to students’ interests by specifying so in their contracts with these banks, according to a 2016 report from the CFPB.
Caught by Surprise
For many students, the bank account they open when they arrive at college is their first account, making the process more difficult to understand. Students often trust a university endorsement to direct them to the best account, according to the U.S. PIRG Education Fund — even when the university endorses banks with policies not tailored to the needs of students.
Valeria Villareal (SFS ’23), a student from Mexico, opened a PNC account like many of her peers just days after arriving at Georgetown, partly motivated by the university’s endorsement of the bank. She received a pamphlet outlining U.S. banking practices but felt no one adequately walked her through the conditions and terminology of her account, leading to her surprise at the bank’s fees.
“When I opened my account, I didn’t stop to think there was anything I needed to be concerned about,” Villareal said. “I wasn’t aware that if I go $1 over, they’ll charge me $36. I just expected for the card to be declined.”
For students without previous interactions with U.S. banks, like many international students arriving to the United States for the first time, these fees can lead to a financial burden if they are unprepared, especially if their first language is not English, according to Vitez.
“They might not be able to comprehend all the terms that are in the marketing material that banks are providing them with on campus,” Vitez said. “There are a couple of different ways students can be taken advantage of — international students check off a lot of these boxes.”
PNC provides international students with a guide to common practices in U.S. banking, which was sent by email to all incoming international students, according to Fournier. However, some students still report they were unaware such resources existed or did not feel fully informed on the details of their account.
Nurakhanova, like Villareal, also did not know the account she opened came with overdraft fees, nor did she realize she had been sent information regarding U.S. banking practices.
The Office of Global Services recognizes its duty to guide new international students through the U.S. banking system and uses PNC representatives in this process, according to Fournier.
“Part of this process includes PNC’s involvement in International New Student Orientation, where representatives from PNC are available to meet with international students and answer questions about money management,” Fournier wrote.
Increasing understanding of the U.S. banking system is a vital part of integrating international students into U.S. universities, but private banks might not be the best agent for educating these students, according to Vitez.
“Financial literacy is all in all a really good thing,” Vitez said. “But we should not outsource these education activities to banks that have a vested interest in students not reading the fine print.”
Despite what may seem like a university endorsement, students should take time to ensure the bank meets their own needs before opening an account, according to Vitez.
“Before signing up for any financial product, particularly debit cards, look for something that is safe and affordable,” Vitez said. “If there is a paid agreement between your school and a bank, you should proceed with caution.”