The Consumer Financial Protection Bureau (CFPB) on Thursday published a new report detailing how partnerships between a small set of financial institutions and colleges and universities have promoted products that have garnered higher than necessary fees for students.
In the report, CFPB looked at 11 account providers offering financial products to more than 650,000 students at 462 institutions of higher education during the 2020-21 award year.
CFPB found that provider agreements imposed overdraft fees and penalties, surprise monthly fees, directed students to account options that did not meet Department of Education (ED) requirements, and lacked public disclosure that clearly indicated the arrangement between the financial services provider and the institution.
ED, in tandem with the CFPB report, issued guidance through a blog post as well as a Dear Colleague Letter on Thursday clarifying schools’ responsibility to ensure campus financial products are consistent with students’ best financial interests.
The guidance expressed concern that not all institutions are meeting their obligations under the department’s cash management regulations and as such, ED has issued a reminder to schools of their regulatory obligations in overseeing arrangements with financial institutions.
“Colleges offering certain financial products to students have a duty to protect students’ best financial interests,” ED noted in the updated guidance. “The Department and the CFPB will continue to monitor to ensure these arrangements meet these requirements.”
The report is the 12th annual installment of the reporting requirements outlined by the Credit Card Accountability, Responsibility and Disclosure Act (“CARD Act”) and covers over 1.2 million student checking and credit card accounts.
Publication Date: 10/14/2022