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Students at historically Black colleges and universities, for-profit colleges, and Hispanic-serving institutions pay higher-than-average fees when they open a college-sponsored deposit account, the Consumer Financial Protection Bureau finds in a report released Tuesday.
The agency’s annual report on college banking and credit card agreements offered new research and data on the financial products that colleges market to students. Colleges and universities can partner with banks to disburse financial aid to students in the form of prepaid credit cards or bank accounts.
The bureau has raised concerns about those partnerships in recent years, including that financial institutions and colleges are steering students to expensive financial products. The 2022 report focused on the agreements between colleges and banks, finding that institutions generally weren’t complying with the federal regulations that govern those arrangements.
“Today’s report found that many colleges continue to employ marketing strategies that may mislead students into accepting products that may not be the best choice for them,” CFPB officials said in a news release.
In the 2021–22 award year, students with college-sponsored accounts paid about $15.7 million in fees, including penalties for overdrafting or not having sufficient funds, to financial institutions, even as more banks are phasing out those fees, the report notes.
Students at HBCUs each paid $30.62 in annual fees on average, while those at for-profit colleges and Hispanic-serving institutions paid $29.77 and $28.22 on average, respectively. The average across all institutions was $26.52.
“Many students get their first credit card or deposit account when they enroll in college, and banks know that consumers are unlikely to move to a different provider once a product is integrated into their financial life,” CFPB director Rohit Chopra said in the release. “Schools should take a hard look at the fees and terms of the products they pitch to their students and alumni.”
Meanwhile, credit card issuers paid more than $19.6 million to colleges and affiliated groups such as alumni organizations as part of their agreements, according to the report.
