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Business and Policy Areas
Business and Policy Areas

CFPB Issues Report on Credit Cards, Guidance on Banking Relationships

January 11, 2016

In the waning days of 2015, the Consumer Financial Protection Bureau (CFPB) published two items of interest to colleges and universities. The first focuses on agreements between credit card issuers and institutions, while the second provides guidance to schools seeking arrangements with a bank offering accounts to students.

College Credit Card Agreements

The Credit Card Accountability, Responsibility, and Disclosure Act requires CFPB to annually submit to Congress a report detailing agreements between credit card issuers and colleges and universities, as well as certain affiliated organizations such as foundations. In its most recent report, the CFPB found that the number of schools and affiliates with credit card programs continues to decline.

Card issuers are required to submit data on the number of credit card accounts covered by the agreement, the amount of payments made by the issuer to schools, the number of new accounts opened, and any memorandum of understanding between the issuer and institutions.

In 2014, there were only 369 agreements in effect. Since the CFPB began tracking these agreements in 2009, that number is down 65 percent, from 1,045.

Similarly, payments from card issuers to schools have decreased nearly proportionately. In 2009, payments exceeded $84 million, while payments in 2014 totaled slightly more than $34 million, a decrease of 60 percent.

Safe Student Account Toolkit

The CFPB also recently released a Safe Student Account Toolkit to assist colleges and universities entering arrangements with banks to provide school-sponsored financial accounts. Included in the toolkit is a scorecard institutions can opt to include in requests for proposals from potential banking partners. While optional, the scorecard highlights certain minimum protections required by the Department of Education's cash management rules (revised October 30, 2015). Institutions are encouraged to review the new regulations to ensure compliance, as they govern arrangements between banks and schools.

The toolkit also includes an administrator handbook that is designed to guide college and university officials in selecting accounts. Like the scorecard, the voluntary handbook includes some of the minimum protections outlined in ED's cash management rules.

CFPB and ED began focusing on college banking relationships in 2012 after USPIRG, Consumers Union, and the Government Accountability Office drew attention to troubling practices within the industry, including unavoidable and unusual fees. One of the targets of those reports, Higher One, announced to its clients late last year that it will sell its Refund Management® Disbursement Services and OneAccount business to Customers Bancorp, Inc. Shortly thereafter, the Federal Reserve Board and the Federal Deposit Insurance Corporation announced settlements with Higher One for its allegedly deceptive marketing practices. Higher One will have to pay $24 million to approximately 57,000 students, and was assessed a $2.2 million civil penalty.


Bryan Dickson
Senior Policy Analyst