Hundreds of thousands of students across the country paid stiff banking fees after colleges agreed to marketing deals with big banks, based on a study…
Hundreds of thousands of students across the country paid stiff banking fees after colleges agreed to marketing deals with big banks, based on a study obtained by the Free Press through a federal open records request.
Collectively, students paid $27.6 million in account fees over just one year across campuses reviewed in a newly disclosed study conducted by the Consumer Financial Protection Bureau. The figure is likely higher since all schools were not reviewed.
Colleges are looking for extra money, while banks want young customers. But the marketing marriage might be harmful to the pocketbooks of some cash-strapped students, depending on the type of agreement reached between the college and the bank.
College students dished out as much as a weighted average fee of nearly $47 per active account to Wells Fargo in a 12-month period.
Others, though, paid no charges on average to Fifth Third Bank, according to the report just made public by the Consumer Financial Protection Bureau.
The study involved data from July 1,2016-June 30,2017.
Unfortunately, some colleges had a financial incentive to encourage students to open accounts with banks that had higher fees.
About 116 colleges collectively received more than $16.6 million in royalties or payments — an average of around $36 per account — from the financial institutions as part of such agreements, according to the study done by the watchdog agency.
How much you paid in fees varied greatly by the bank connected with your college.
The report raises more questions about whether some banks are unfairly burying students, who are already taking out hefty student loans, in extra fees. Concerns about potential conflicts of interest continue, as well.
Snagging a deal with a college, of course, can be a moneymaker for banks. Banks may be able to capture prime spots for setting up marketing tables at campus events. Some students may even have the impression that the bank is offering them the best deal because the bank is touted as the school’s preferred banking option.
The CFPB report, which drew from a database of nearly 600 marketing agreements between colleges and account providers, first came to light in a resignation letter written by the chief federal watchdog for student loans.
« The American dream is under siege, » wrote Seth Frotman, assistant director and student loan ombudsman for the Consumer Financial Protection Bureau.
Frotman, who resigned effective Sept. 1, charged that new evidence was essentially being suppressed and that the nation’s largest banks were « ripping off students on campuses across the country by saddling them with legally dubious account fees. »
Frotman charged that President Donald Trump’s administration is protecting lenders and big business.
