CREW Releases Shelved CFPB Report on Dubious Student Account Fees
Trump Administration political appointees refused to publish a CFPB report criticizing banks and colleges for revenue-sharing agreements that led to higher charges to students, documents obtained by CREW show.
Through a FOIA request, CREW has obtained the report CFPB refused to publish. The shelved report states that over 100 colleges reported being paid by banks to promote “college-sponsored” bank accounts to students. This is despite the fact that CFPB and other agencies had previously “expressed concern over the relationship between revenue sharing provisions in contracts and fees charged to student account holders.” The unpublished CFPB report states:
“In particular, these provisions raise questions about potential conflicts of interest, including whether revenue sharing encourages higher-fee financial products that crowd out competition from providers of accounts for which student account holders would avoid high fees and/or accounts where all student account holders overall would pay less in fees.”
The CFPB report found that students on average pay higher account and overdraft fees for college-sponsored accounts when there is a revenue-sharing agreement between the account provider and the college. Specifically, where there was such an agreement, students “paid an average of $36.52” annually in account fees, and, in most instances, the accounts charged overdraft fees. By contrast, where there was no such agreement, students “paid an average of $11.93” annually in account fees, and the accounts did not appear to charge overdraft fees.
The existence of the shelved report was revealed when Seth Frotman resigned as CFPB’s Student Loan Ombudsman in September 2018. In a scathing resignation letter, Frotman criticized CFPB leadership for “[s]hielding bad actors from scrutiny” and “turn[ing] its back on young people and their financial futures.” “For example,” Frotman wrote, “when new evidence came to light showing that the nation’s largest banks were ripping off students on campuses across the country by saddling them with legally dubious account fees, Bureau leadership suppressed the publication of a report prepared by Bureau staff. When pressed by Congress about this, you chose to leave students vulnerable to predatory practices and deny any responsibility to bring this information to light.” As explained above, the report itself confirms Frotman’s critiques.
CREW’s FOIA request also seeks documents explaining CFPB’s decision not to publish this report, which CFPB has yet to release.