Miller, Durbin Applaud CFPB’s Efforts to Protect Students from Risky Campus Financial Products
WASHINGTON– U.S. Rep. George Miller (D-Calif.), the senior Democrat on the House Committee on Education and the Workforce, and Senator Dick Durbin (D-Ill.), the Assistant Senate Majority Leader, released the following joint statement today after the Consumer Financial Protection Bureau (CFPB) announced that it is launching an inquiry into the impact of campus financial products marketed to students by colleges to determine whether these arrangements are in the best interest of students. Campus financial products include school issued debit cards that are used to access a student’s financial aid and school- affiliated bank accounts.
“In June, we asked the Consumer Financial Protection Bureau to examine campus financial products after hearing troubling accounts of potentially bad deals that target college students. We are pleased to see the Bureau announce major steps forward today to investigate potential problems with these financial products that may leave students deeper in debt. At a time when student debt has surpassed all credit card debt and topped $1 trillion, we must do everything in our power to make sure banks play by the same rules on campus as they do off campus, and that schools enter any deals with financial institutions with their students’ best interests in mind. We hope this inquiry will help students, families, schools, and policymakers determine how best to protect student financial aid from unnecessary nickel-and-diming.
“While well-crafted deals for aid disbursement could be a benefit to students, big banks have a long track record of targeting colleges as gatekeepers to young consumers. Congress has already taken action a number of times to ensure students are protected. In the past few years, we have worked to pass the Student Loan Sunshine Act and the CARD Act to ensure students and families will encounter a more trust-worthy student aid system and ban certain types of predatory marketing toward students. This inquiry, as well as other work we’ve undertaken to examine fees associated with student aid debit cards, should help us determine what further protections for students are needed.”
Today’s announcement from CFPB is in response to a request made last summer by Miller and Durbin asking that CFPB examine the financial impact debit card agreements between banks and institutions of higher education may be having on our nation’s college students. As school budgets have shrunk, institutions of higher education are increasingly turning to debit cards, typically under contract with a financial institution like Higher One or Sallie Mae, to distribute federal student aid to students. A report from the U.S. Public Interest Research Group (U.S. PIRG) Education Fund, found that more than 9 million students across the country are at risk of being nickel-and-dimed to death with fees because their debit cards may come with high user fees, hidden transaction costs and insufficient consumer protections – adding to the mountain of debt many higher-education students must take on. CFPB’s announcement today is a first step to addressing Miller and Durbin’s concerns.
To read Miller and Durbin’s letter to CFPB click here.
For more information on CFPB’s inquiry announced today click here.