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Colleges and banks continue to target students with high-fee products
Friday, December 16, 2016
The Consumer Financial Protection Bureau (CFPB) released its Student Banking Report to Congress which found that dozens of the nation’s largest colleges continue to make deals with banks that allow products with risky features to be marketed to students. Despite wide availability of safer and more affordable accounts currently used at hundreds of colleges across the country, these agreements can lead students to rack up hundreds of dollars in fees per year. Key findings from the Bureau’s report and analysis of college marketing deals for prepaid and debit accounts include:
· Dozens of bank deals with colleges fail to limit costly fees. The Bureau found that dozens of deals with banks for school-sponsored accounts, including deals at some of the nation’s largest colleges and universities, do not place limits on account fees, such as overdraft fees, out-of-network ATM fees, or other common charges. These costly fees remain a concern at dozens of campuses, even as safer and more affordable alternatives are widely available at many other schools across the county.
· Deals provide financial benefits for banks and schools but offer few, if any, financial benefits for students. The Bureau found marketing agreements between colleges and banks often contain extensive details about how the school and the bank can profit. Contracts frequently include details on revenue sharing and other payments made in exchange for exclusive marketing access to colleges’ student population. At the same time, many of these agreements do not require banks to offer safe and affordable accounts—and may drive students to high-cost products.
· Some schools fail to disclose key details of marketing deals with banks. Most colleges were required by the Department of Education to publicly disclose marketing contracts by Sept. 1, 2016. However, the CFPB found that some agreements publicly announced by banks or colleges were not included in the Department of Education’s public database of agreements, suggesting that some schools did not submit their agreements to the Department before the agency’s disclosure website launched.
To read the CFPB's full report, click here.
To protect your family from high-fee products, check out the CFPB's Paying for College suite of consumer tools. The CFPB developed a guide for students and their families on how to choose a student checking or debit card product. Managing Your College Money is available at: http://www.consumerfinance.gov/paying-for-college/manage-your-college-money/
For more information visit CFPB students at consumerfinance.gov/students
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