Durbin Applaud CFPB'S Call for Transparency Regarding Campus Debit Card Programs
Durbin request sparked CFPB inquiry into risky campus financial products
[WASHINGTON, D.C.] – U.S. Senator Dick Durbin (D-IL) today commended the Consumer Financial Protection Bureau’s (CFPB) call for financial institutions to publicly disclose agreements with colleges and universities to market financial products to students, including debit, prepaid, and other products. Durbin and U.S. Representative George Miller (D-CA), the senior Democrat on the House Committee on Education and the Workforce, have been leaders in calling attention to this issue, and submitted a request to CFPB last year asking that the agency investigate the impact of campus financial products marketed to college students.
“Helping protect students from risky campus financial products is exactly the kind of work the Consumer Financial Protection Bureau was designed to do,” Durbin said. “I applaud the CFPB for taking steps to ensure that students are protected from predatory marketing practices and hidden fees, and I second their call for increased transparency regarding campus debit card programs that may be leaving students already burdened by loans even deeper in debt.”
In June 2012, Durbin and Miller sent letters to CFPB Director Richard Cordray, Education Secretary Arne Duncan, and Department of Education Inspector General Kathleen Tighe, expressing concern over the adverse financial impact debit card agreements between banks and institutions of higher education may be having on college students. Durbin and Miller urged the Department of Education and CFPB to carefully examine the bank-affiliated student debit card practices at over 900 colleges and universities. A copy of the letter to Secretary Duncan is available here and a copy of the letter to Director Cordray and Inspector General Tighe is available here.
In response to Durbin and Miller’s request, the CFPB announced that it would be 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. In September, the CFPB hosted a public forum to present its initial findings, based on public comments and other market information. Already, CFPB has found a shift in financial product marketing partnerships from college credit card agreements to student checking and debit and prepaid card products.
Also, in September, Durbin and Miller sent letters to some of the nation’s largest banks asking bank executives to explain the scope of their financial arrangements with colleges, how much money the deals pay to colleges, and how much in fees are charged to students. The letter was also signed by U.S. Senators Sherrod Brown (D–OH) and Elizabeth Warren (D–MA) and U.S. Representatives Maxine Waters (D-CA), Louise Slaughter (D-NY), and Peter Welch (D-VT). A copy of that letter is available here.
According to a report released from the U.S. Public Interest Research Group (U.S. PIRG) Education Fund, more than 9 million students across the country are at risk of being nickel-and-dimed with unreasonable fees because their campus 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 are already taking on.
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