On October 13, 2022, the CFPB published a report on terms and fees associated with banking products marketed in partnership with colleges to students. The CFPB questions the compliance of some marketing deals between colleges and financial institutions to the Department of Education rules. In relation to this, the Department of Education issued guidance to schools on the requirements for college-sponsored banking arrangements.
The CFPB reviewed data from 11 account providers, including non-bank financial service providers, banks, and credit unions offering more than 650,000 student accounts in partnership with 462 institutions of higher education during the 2020-2021 Award Year. The CFPB’s key finding include:
Financial services providers and their partner schools appear to offer and promote more costly products to students than are otherwise available in the market;
One entity dominates the market for financial aid disbursements, providing nearly 70% of the accounts offered in partnership with schools—and imposes surprise monthly fees;
Many students are directed to lists of account options that do not appear to meet Department of Education requirements; and
Many agreements between financial institutions and colleges do not appear to be posted prominently as required.
Read the CFPB’s announcement here.
The CFPB’s report on College banking and credit card agreements can be found here.