In a recent blog post, the CFPB published the results of a study of school officials and publically available agreements regarding student financial products. The study follows the CFPB’s call on financial institutions to voluntarily disclose their arrangements with colleges and universities to market financial products.
According to the survey, 69 percent of debit card agreements are already available to the public because many public college contracts are subject to state open records laws. Among those publically available agreements, the CFPB found several agreements where schools are paid a licensing fee for use of their logos, a practice Congress restricted in 2008 for student loans–but not for other financial products. The CFPB also found agreements where financial institutions pay schools a bonus for recruiting students to sign up for the institutions’ student checking accounts marketed on campus. Finally, some agreements provide schools with free or discounted banking services in exchange for on-campus marketing privileges. Overall, the CFPB found that while some financial institutions make a significant amount of revenue on student financial products, others see such products as a way of developing a long lasting relationship with students at the start of their independent financial lives.
The blog post may serve as a warning for financial institutions that have not already “voluntarily” disclosed details of their relationships with universities and colleges. The CFPB is sending a clear message to the industry that it is committed to addressing the issues underlying student affinity products.
More information may be found here.