The Consumer Financial Protection Bureau (CFPB) continues to demonstrate that it is monitoring higher education institutions for compliance with federal requirements. The CFPB recently sent a warning letter to 17 colleges alleging that the schools may have violated federal law by not publicly disclosing their agreements with credit card issuers, as required under the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act. The agency indicated it may take enforcement action if the schools do not begin publicly disclosing their agreements.
As previously discussed, the CFPB considers colleges and universities to be financial service providers over which the agency has jurisdiction. The regulator has stressed that it is particularly concerned about fees and marketing practices associated with college-sponsored financial products, such as credit, debit or prepaid cards and checking accounts.
In an effort to increase transparency regarding campus affinity arrangements, the CFPB also recently published its Safe Student Account Toolkit. The CFPB encourages higher education institutions to use the Toolkit to evaluate costs and benefits, fees, and features before entering into partnerships with financial institutions. Helpfully, the Toolkit highlights some of the protections that will be required by the Department of Education beginning July 1, 2016, for certain college-sponsored accounts marketed directly to students or when colleges partner with third-party servicers that offer or directly communicate to students about preferred financial accounts and assist with the disbursement of Title IV funds. The Toolkit is currently merely a resource for college administrators, but clearly the CFPB hopes schools will feel pressure to use it, thereby, increasing transparency in college and bank partnerships.
These recent actions by the CFPB show that protecting students from financial harm is one of the agency’s top priorities and the regulator will not hesitate to exert its authority over higher education institutions.
What it means to you
If your school has college credit card agreements in place with financial institutions, you should make sure such agreements are publicly available. The easiest way to comply with this federal requirement is to publish the agreement on your school’s website. Alternatively, you can note on your website that the agreement is available upon request, but, subsequently, you must provide the agreement within a reasonable timeframe when requested.
Furthermore, if your school is looking to partner with a financial institution, consider reviewing and using the CFPB’s Toolkit to assist you in choosing a financial provider that will offer the best products and services to your students. If you currently partner with a financial institution, consider reviewing the CFPB’s Toolkit to confirm your bank partner does not have any hidden or excessive fees or other features that may harm students and draw the attention of the CFPB.