WASHINGTON (Legal Newsline) — The Consumer Financial Protection Bureau (CFPB) announced Dec. 14 a report detailing that costly fees and risky features often are attached to college-sponsored accounts.
“Deals between big banks and schools can drive students into accounts that contain high fees,” CFPB Director Richard Cordray said. “Today’s report shows that many schools are more focused on their bottom line than their students’ well-being when they agree to sponsor financial accounts. Many young people struggle to manage money while at school and we urge schools to put students’ financial interest first.”
The CFPB analyzed about 500 marketing deals between colleges and banks. The report says many of these deals allow for risky features and that these features cause students to incur hundreds of dollars in fees per year.
“Colleges across the country continue to make deals with banks to promote products that have high fees, despite the availability of safer and more affordable products,” said CFPB student loan ombudsman Seth Frotman. “Students shouldn’t get stuck with the bill when their school inks a deal for an account that’s not in their best interest. ”
In a recent bulletin, the CFPB reminded colleges and universities that federal law requires them to publicly disclose marketing agreements with credit card companies.