Social media, big tech companies, and American universities—what do they all have in common? They have all made a business of selling off access to their consumers for a costly price tag. At least, that is what the Consumer Financial Protection Bureau brought attention to in their latest report to Congress.
The Consumer Financial Protection Bureau (CFPB) released its annual report to Congress this week, and its findings should raise concern about the vulnerability of college students’ financials nationwide. The report, entitled “College Banking and Credit Card Agreements,” alleges that higher ed institutions across the country have been receiving kickbacks from banking institutions for driving students’ business their way. Furthermore, the financial advice, programs, and accounts they receive from these banks aren’t necessarily in the students’ best financial interest.
The Wall Street Journal reported last week that CFPB said schools could be seen as inappropriately steering students toward particular financial institutions that leave them with overdraft fees, inactivity penalties, and ATM fees. In these partnerships, banks pay for access to students so they can pitch them new checking accounts, credit cards, and other products. Spokespeople for some colleges have pointed out the fact that students are not required to bank with these partners, and the actions are initiated solely by the students themselves.
However, the CFPB review found that students have already accrued tens of millions of dollars-worth of account costs brought about by these arrangements—all while colleges rake in millions of dollars in their own kickbacks.
Additionally, the Department of Education, the federal entity responsible for oversight of such matters, has exacerbated the issue by failing to meet its responsibilities. The report found that the database run by the Department, designed to facilitate the required public disclosures, was last updated in 2018—halfway through President Trump’s term in office. In response to the report, the Department sent a letter to higher education institutions across the country reminding them of their responsibility to report these financial partnerships and warning failure to do so could result in punitive action.
As the Biden Administration considers what steps can take to alleviate the nationwide student financial crisis, more attention should be paid to irresponsible institutional behavior that often comes at the cost of students’ success.
