The CFPB urged financial institutions on Tuesday to publicly disclose any agreements with institutions of higher education related to marketing of financial products to students.
“Students and their families should know if their school, whether well-intentioned or not, is being compensated to encourage students to use a specific account or card product,” CFPB Director Richard Cordray said. “When financial institutions secretly give kickbacks to schools, they are engaging in risky practices.”
In 2008, Congress passed a bill that requires colleges and universities to disclose lender arrangements with student loan providers and to implement a code of conduct for financial aid officers. In 2009, Congress passed the CARD Act, which requires issuers to disclose the terms and conditions of college credit card agreements to the CFPB.
The announcement follows the release of the CFPB’s annual report on college credit card agreements that found that the number of agreements fell by 41 percent between 2009 and 2012. The amount paid to universities and colleges by credit card issuers also declined by 40 percent to reach $50.4 million.
Another survey, conducted by the agency in 2012, showed the majority of college debit card arrangements are readily available to the public, though consumers may be required to file a formal request to see the agreements.