Beginning this fall, student groups will no longer be able to maintain outside bank accounts, and instead must open accounts at Harvard University Employees Credit Union, the College announced yesterday.

The change is the product of the College’s attempt to decrease costs for student organizations and increase fiscal accountability among student group officers, said Assistant Dean of the College Paul J. McLoughlin. He and Associate Dean of the College Judith H. Kidd authored the announcement e-mail sent to student group leaders.

“Several student organizations weren’t being allowed to use the Harvard Tax ID to open bank accounts, and were therefore upset that they were being forced to pay a $12 monthly fee since they weren’t legally a not-for profit,” McLoughlin said. “The reason we’re making everyone move over is that now that we have the agreement in place it makes sense from an organizational standpoint so we can smooth transitional problems.”

Monday’s e-mail explained that all groups must make the transition “as a condition of recognition” this fall. The deadline for registration of officially recognized student groups is in November, which gives all groups a little over two months to close out their old bank accounts and move all deposits to the Harvard University Employees Credit Union (HUECU).

According to McLoughlin, both Princeton and MIT have mandated similar arrangements for their student groups, the former establishing a partnership with Fleet, the latter requiring organizations to conduct business directly with the school.

While Undergraduate Council President Matthew W. Mahan ’05 and Vice President Michael R. Blickstead ’05 said the change in policy would be overwhelmingly positive for most student groups they were concerned that this change was made mandatory without student consultation.

“I think this is the kind of thing that is potentially a great service for student groups,” Mahan said. “But if the administration had consulted student groups, or at least the [council], they would have seen that there are reasons why groups use other banks—one size does not fit all.”

The banking service that HUECU advertises for student groups on its website has no service fees, unlimited monthly dual-signature checks, free online and 24-hour automated telephone banking and a designated representative who will serve as a student group liaison. The accounts are not eligible for debit or credit cards, loans or online bill payments. An HUECU representative will advise student groups with significant assets on how to divide their money between an interest-bearing but restricted money market account which will earn 1.25 percent interest on deposits over $50,000 and a checking account, McLoughlin said.

The College will receive an annual summary with each account balance, but University Hall said it will not be scrutinizing each account individually.

“[The new arrangement] allows for closer contact,” McLoughlin said. “But I am not going to go in and monitor those accounts; we have no online access, no login, and get no statements so there is no need to worry that we’ll be watching like big brother.”

But Blickstead said he was concerned that the HUECU is being provided a monopoly on student group accounts.

“It kind of is a little like big brother to me and I want to know what their motives are. You can accomplish the same objectives without taking money away from the major commercial banks,” Blickstead said. “Any economist will tell you that banking is better with competition.”

Blickstead said he is also concerned about the policy of not allowing groups to use credit or debit cards.

“We don’t want students to need to use their own personal credit cards,” Blickstead said. “Student group presidents have to be rich students with this system and we need to make it so anyone can afford to be a leader.”

McLoughlin said the dean’s office was interested in increasing accountability and limiting the chance of fraud and therefore restricted debit cards and required two signatures on each check. Blickstead and Mahan agreed that increasing accountability is important in the wake of the Hasty Pudding Theatricals scandal, in which two students embezzled thousands of dollars from the group in 2001.