https://www.politico.com/story/2018/12/10/student-loan-fees-wells-fargo-1021129
The Trump administration for months concealed a report that showed Wells Fargo charged college students fees that were on average several times higher than some of its competitors.
The “unpublished” report was obtained by POLITICO through a Freedom of Information Act request. It was produced by the Consumer Financial Protection Bureau office previously led by Seth Frotman, who quit as the bureau’s top student loan official in protest of Trump administration policies. Frotman said in his resignation letter that CFPB leaders had “suppressed the publication” of the report.
The previously unseen analysis examined the fees associated with debit cards and other financial products provided by 14 companies through agreements with more than 500 colleges across the country.
Wells Fargo provided roughly one-quarter of those accounts but the bank collected more than half of all fees paid by students, according to the report data. The bank’s average annual fee per account was nearly $50, the highest of any provider.
The report raises questions about whether campus accounts with high fees comply with Education Department rules requiring colleges to make sure the products they help promote are “not inconsistent with the best financial interests” of their students.
The CFPB first warned in December 2016 that some financial products offered on college campuses may run afoul of those regulations. The latest report is a more in-depth analysis of the fees charged to students during the 2016-17 academic year, the first year that colleges were required to make that information public.
“Our analysis finds that most students at most colleges are able to use their college-sponsored account fee free,” the CFPB report says, but it notes that “certain account fees and providers still pose risks to student consumers.”
The Trump administration for months concealed a report that showed Wells Fargo charged college students fees that were on average several times higher than some of its competitors.
The “unpublished” report was obtained by POLITICO through a Freedom of Information Act request. It was produced by the Consumer Financial Protection Bureau office previously led by Seth Frotman, who quit as the bureau’s top student loan official in protest of Trump administration policies. Frotman said in his resignation letter that CFPB leaders had “suppressed the publication” of the report.
The previously unseen analysis examined the fees associated with debit cards and other financial products provided by 14 companies through agreements with more than 500 colleges across the country.
Wells Fargo provided roughly one-quarter of those accounts but the bank collected more than half of all fees paid by students, according to the report data. The bank’s average annual fee per account was nearly $50, the highest of any provider.
The report raises questions about whether campus accounts with high fees comply with Education Department rules requiring colleges to make sure the products they help promote are “not inconsistent with the best financial interests” of their students.
The CFPB first warned in December 2016 that some financial products offered on college campuses may run afoul of those regulations. The latest report is a more in-depth analysis of the fees charged to students during the 2016-17 academic year, the first year that colleges were required to make that information public.
“Our analysis finds that most students at most colleges are able to use their college-sponsored account fee free,” the CFPB report says, but it notes that “certain account fees and providers still pose risks to student consumers.”
The CFPB did not include the analysis as part of its annual public report on campus financial products completed last year. But it did provide a copy to the head of the Education Department’s Office of Federal Student Aid in February, which means it's been available for at least 10 months.
A spokesperson for the CFPB did not comment on why the bureau did not make the report public. “The Bureau shared this information directly with the Department of Education," the spokesperson, who declined to be named, said in a statement.
The Education Department did not comment on whether it took any action based on the report, which it did not make public, either.
Rep. Bobby Scott (D-Va.), who is poised to become chairman of the House education committee, said earlier this year that the allegation that the CFPB had concealed the report on fees charged to students warranted an “immediate investigation” and called for congressional hearings.
The report found that more than 1.3 million students using college-sponsored debit cards or other products collectively paid $27.6 million in fees during the 2016-17 school year.
The largest provider of campus accounts was BankMobile, which is offered by Customers Bank and had annual average fees of $12.12 per account. PNC Bank, the third-largest provider, charged average annual fees of $15.84.
Wells Fargo was the second-largest provider with average annual fees of $46.99 per account.
Jim Seitz, a spokesperson for Wells Fargo, said the bank does not charge extra fees for its campus product but noted that “customers use their accounts in different ways.”
“For example, some campuses have higher concentrations of nontraditional or part-time students with more complex banking needs, such as sending wires or purchasing more checks,” he said in a statement. “Others may have high international populations that send and receive money to/from overseas.”
“Using the wide range of convenient tools and resources we offer can help customers to manage their account activity more effectively, and when possible, avoid incurring added costs,” he added.
The CFPB report also questioned the agreements under which financial services providers pay colleges to promote their products on campus. It found that students ended up paying three times more in average fees when their bank or account provider had paid the college.
Those arrangements, the report says, “raise questions about potential conflicts of interest, including whether revenue sharing encourages higher-fee financial products that crowd out competition from providers of accounts for which student accountholders would avoid high fees and/or accounts where all student accountholders overall would pay less in fees.”
Allied Progress, a liberal advocacy group that has been sharply critical of the Trump administration’s management of the CFPB, was among several groups that had been pushing the consumer bureau to release the report.
"This report shows Wells Fargo and other big banks that provide college-sponsored deposit and prepaid accounts are burying students with crippling fees and the Department of Education is doing nothing about it,” Karl Frisch, the group’s executive director, said in a statement. “No wonder Mulvaney's CFPB tried to make sure it would never see the light of day. The actions by these banks and CFPB officials that sought to cover it up must be investigated by Congress.”
Mick Mulvaney, OMB director, has been the acting director of the bureau. The Senate last week confirmed Kathy Kraninger as the new director.
In a statement, Consumer Bankers Association President and CEO Richard Hunt said that "the more services – wire transfers, overdraft protections and the like – used by a customer of any age will result in increased annual costs. Each product and service carries a nominal fee – as the report notes – and is optional.”