For many children, an early experience with banking is simply passing out that colorful Monopoly money. But now some kids are getting closer to the real thing. Hundreds of student-run bank branches and credit unions have opened in schools across the United States. Alex Schmidt reports on the first student-bank in Los Angeles which opened this spring.


JERRY LIU: So how much would you like to deposit?


ALEX SCHMIDT, BYLINE: Wearing a red Union Back polo shirt, high school senior, Jerry Liu, politely helps a peer with her bank deposit. This could be any bank branch with a waiting area and even a decorative plant on the table. But right outside this island of adulthood is a hallway of LA's Lincoln High School.

This is one of three student-run Union Bank branches in the state of California. They're all in low-income immigrant-heavy neighborhoods. You can only bank here if you're a student, teacher or parent, but these are real accounts handling real money. Liu is 1 of 12 student bankers at Lincoln.

LIU: It taught me a lot of new things. I was really worried about finances and et cetera before I go off to college. And it opened my eyes to a lot of the new world.

SCHMIDT: Union Bank trained Liu to work as a teller and will give him a stipend and scholarship totaling $1,500. LA Unified School District's Monica Garcia was instrumental in bringing the bank here.

MONICA GARCIA: I thought the innovation of the student-run bank would be something that fits into our mission of college-ready career-prepared graduates.

SCHMIDT: Many schools across the country are experimenting with student-run banks. Union Bank and Capital One are two of the biggest. J Michael Collins has studied the phenomenon in-depth. He's a professor of consumer finance at the University of Wisconsin, Madison. And he says student-run banks have operated without much oversight which has bred skepticism.

J MICHAEL COLLINS: You have some parents who say, well, why would we allow that particular bank branch? I mean, aren't we granting them essentially a monopoly on these relatively naive unsophisticated children?

SCHMIDT: For instance, Union Bank didn't have to compete against others to enter LA schools. It spent $200,000 to build each branch and pays to staff them with managers. Professor Collins believes banks are mainly in it for PR and marketing. Union isn't in it for a financial return, says Jan Woolsey, who heads community reinvestment at the bank.

JAN WOOLSEY: We don't expect to make money. Certainly I think it'll be good for our brand that we're making this kind of investment in young people and in communities that need us. But, really and truly, our real motivation is how do we help strengthen communities and make them healthier?

SCHMIDT: Love banks or hate them, operating outside the financial system is tough and even opens up vulnerable groups to predatory lending. A school bank branch could help bring families into the system.

As for student bankers, they love their jobs. They get to build up their resumes, make money. Some of them have even gotten actual jobs at Union Bank. Those who bank there like it too. It teaches them to save.

LIU: Twenty - 21, 22, 23, 24, 25.

WOMAN: Thank you very much.

LIU: No problem.

SCHMIDT: Back at Lincoln High, student banker, Jerry Liu, finishes up his transaction. It wasn't long ago that getting access to credit at his age would have been unheard of. And that's an important point, says J Michael Collins, of the University of Wisconsin, Madison.

COLLINS: We are in a bit of a grand experiment on financial literacy in schools. I mean, and as I sort of reflect on all the different approaches that are out there, this very simple concept of placing a bank branch in a school setting, to me, seems to have a lot of bang for the buck.

SCHMIDT: The Treasury Department is considering a designation especially for school branches which could pave the way for many more. For NPR news, I'm Alex Schmidt.


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