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Sunshine for student financial products

Today, Director Cordray is alerting financial institutions about the potentially risky practice of making secret payments to colleges and universities to market deposit accounts, prepaid cards, debit cards, and other financial products to students. We’re calling on financial institutions to voluntarily make these agreements available on their websites.

We’re also releasing a report on college credit card agreements, which shows a continued decline from 2011 to 2012.

Earlier this year, we set out to better understand how financial products are marketed to college and university students. We heard from many colleges, universities, financial institutions, as well as students and their families. We found that financial product marketing partnerships have shifted away from credit cards towards other products.

Congress created reforms to help consumers better understand the nature of these marketing partnerships. The Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (CARD Act) requires credit card issuers to report to us the terms and conditions of any college credit card agreement with an institution of higher education.

This includes the number of credit card accounts, amount of payments made to the company, the number of new accounts, and any agreement between the company and the college or university. You can see these agreements in our public database of college credit card agreements. Check it out and see if your school has an agreement to market credit cards.

Including other products

The CARD Act requirement is limited to credit cards and doesn’t include other financial products marketed through schools. In a public comment submitted to us by the National Association of College and University Business Officers (NACUBO), the association described several best practices, particularly as they relate to debit card arrangements used to access student loan and scholarship proceeds. NACUBO urges institutions to “publicly disclose the terms of any agreements.”

Making these agreements available for students and their families is a sign of a financial institution’s commitment to transparency when marketing deposit accounts, prepaid cards, financial aid disbursement accounts, and other financial products. However, not publicly disclosing these agreements raises potential consumer protection risks.

According to a survey of school officials, 69 percent of debit card arrangements are already available to the public. However, finding these agreements can be troublesome. You may even need to file a formal request under state open records laws to see them. Easier access to these arrangements will increase the public’s confidence that these agreements are structured to help students build a bright financial future.

In the new year, we’ll be contacting financial institutions to find out more about their commitment to transparency. We’ll be asking financial institutions about whether existing agreements are made available to students and families in a clear and conspicuous place on their company’s website. Financial institutions or anyone who wants to share information about the availability of these agreements can email us.

If you are a student, or family member of a student, you can check out our guide to Managing Your College Money and our consumer advisory on accessing student loans and scholarships.

If you have a complaint about a financial product or service, you can submit a complaint online or by calling (855) 411-2372.

Rohit Chopra is the CFPB’s Student Loan Ombudsman. To learn more about the CFPB’s work for students and young Americans, visit

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