Colleges Not Doing Students Any Financial Favors: Onsite Coverage
WASHINGTON — Financial products offered to students on their college campuses are often less competitive compared to what’s available to the general public, according to a Consumer Financial Protection Bureau analysis of financial products marketed on college campuses.
“Trust in higher education can be undermined when schools are not careful about whom they partner with to provide their students with financial products and services,” CFPB Director Richard Cordray said Monday at a Banking on Campus Forum in Washington, D.C.
“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 CFPB released a “Request for Information” in February to learn about the offers available to students on college campuses through banks and credit unions.
“Our goal was to engage with the higher education community about how they structure their marketing partnerships with financial institutions,” Cordray said.
Institutions of higher education have partnered with credit unions and banks for offers including private loans, credit cards, loans under the now-discontinued Federal Family Educational Loan program and checking accounts.
The CFPB found that “little information is available about whether codes of conduct exist at schools with product partnerships.”
The responses to the CFPB’s Federal Register notice also “did not indicate whether schools with financial product partnerships restrict the acceptance of gifts by employees and agents.”
The CFPB wants to further explore how “colleges and universities can better use their bargaining power to negotiate product terms and conditions that are more competitive than products available to the general public,” CFPB’s student loan ombudsman, Rohit Chopra, said at the forum.
He also said the CFPB wants to find better ways to help students shop for debit, checking or prepaid card products.
Officials from the Department of Education, a representative from the attorney general of New York’s office and college students also addressed the forum.