The Consumer Finance Protection Bureau (CFPB) released its 14^th annual report to Congress on college banking and credit card agreements, which alleged, among other things, that many schools steer students toward financial products, such as checking accounts and credit cards, that are often laden with additional fees.
The report presents new research on financial products that institutions market to their students, including deposit accounts, dual-purpose identification cards, and credit cards, using publicly available data from 449 colleges.

The report presents new research on financial products that institutions market to their students, including deposit accounts, dual-purpose identification cards, and credit cards, using publicly available data from 449 colleges.

According to the report, schools are misleading students into accepting products that may not be in their best financial interests, despite Department of Education regulations requiring institutions to both ensure that student’s best financial interests are taken into account and consider prevailing market norms when offering financial products. Because institutions do not face the same competitive pressure to lower fees or provide low-cost products, these financial products are often much more expensive than other similar products on the market.

Other key findings

• In the 2021-2022 award year, financial institutions generated over $17.3 million in revenue from over 650,000 student bank accounts.
• The total fees charged to students varied by institution type, but students at Historically Black Colleges and Universities (HBCUs), for-profit colleges, and Hispanic-serving institutions (HSIs) all paid higher-than-average fees per account.
• In 2022, credit card issuers paid over $19.6 million to colleges and affiliated organizations (predominantly alumni associations) for their partnerships, with an average payment of approximately $138,000.

Annual fees charged to students, such as overdraft, non-sufficient funds (NSF), and monthly account maintenance fees, were a significant focus of the report. The CFPB found that, in the 2021-2022 award year, students paid $15.7 million in fees to financial institutions. Seventy-nine percent of overdraft and NSF fees were paid by 9% of account holders with a median cost of $358. The average fee amount across all account holders was $26.50, with students at HBCUs, for-profits, and HSIs paying higher fees than average.
In the release of the report, which is required by the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009, CFPB director Rohit Chopra said, “Schools should take a hard look at the fees and terms of the products they pitch to their students and alumni.” The agency’s recommendations include:

• Eliminating overdraft fees altogether;
• Reducing the size of overdraft fees;
• Reducing the number of overdraft fees that can be charged each day;
• Providing a cushion or grace period before a fee is charged; and
• Eliminating NSF fees entirely.