The CFPB held last week its Banking on Campus forum, a discussion of financial products aimed at college students that includes research findings and testimony from student and industry representatives.
“The Consumer Bureau wants to help the American people to navigate the consumer financial marketplace more effectively,” CFPB Director Richard Cordray said. “And I am concerned that some of our colleges and universities, whether well-intentioned or not, may be encouraging or even requiring our young people to use financial products that do not offer the best deals.”
Cordray said that while students and families trust the nation’s schools to encourage betterment and learning, trust can be undermined when institutions “are not careful” about the companies they partner with to offer students financial products and services.
“We are distressed to hear that some students feel pressured to use specific products and may be unaware that when they sign up for those products their schools are secretly making money,” Cordray said.
The 2008 Higher Education Opportunity Act and 2009 Credit CARD Act generally prohibit lenders from using a university logo or mascot, but the rule does not apply to debit cards and checking accounts, The Huffington Post reports.
An investigation by the New York attorney general’s office earlier this year found that students assumed use of their school’s logo or branding meant the school endorsed the lender, when the bank had simply paid the school to use its logo.
Some students were found to have been charged “inactivity” fees to their campus debit cards, and others said they lost some student loan and grant money to fees issued by third-party vendors who disburse the funds, according to The Huffington Post.
While the CFPB has said that most schools do not have questionable agreements with financial institutions, the agency is concerned about the impact on students of universities that do.