Seventeen colleges will receive warning letters this week from the Consumer Financial Protection Bureau stating they may be in violation of federal law for not disclosing agreements they have with credit card companies. The CFPB declined to name the 17 institutions.

Colleges that have agreed to co-sponsor credit card accounts or partner with companies to market credit cards to students are required by law to either make contracts available upon request or post the agreements on their websites. But when asked by the CFPB in a survey of 25 colleges, 17 did not provide their agreements. Twenty of the 25 did not make the agreements available online, either, though that is not illegal.

"The purpose of these warning letters is to put these schools on notice that their practices may be violating the law, and that they need to carefully review their approach to public disclosure and bring it into compliance with the law,” state CFPB spokeswoman Moira Vahey, who added that it’s CFPB policy to not disclose the identity, comment on or confirm those involved in potential enforcement investigations. The CFPB, In a larger report on college credit card agreements, found the number of agreements declined from 1,045 in 2009, when Congress passed the law boosting disclosure requirements, to only 272 in 2014. Money paid by credit card issuers to colleges also dropped from $84 million in 2009 to $34 million last year. College debit and prepaid card agreements are more common that credit card deals, according to the Government Accountability Office. At least 852 schools had agreements with companies to market debit or prepaid cards to students in 2013. Unlike credit cards, historically, these products haven't had specific federal requirements to disclose their marketing partnerships. The CFPB previously identified agreements where financial institutions offer royalty payments for use of college trademarks or bonuses based on the number of student account sign-ups. More than 10 million college students attend a school that has made a deal with a financial institution where the college helps with or allows the promotion of debit or prepaid cards. The products are often endorsed with a college logo or linked to a student identification card. Many more students also attend schools with agreements to co-sponsor credit card accounts. Colleges may get a share of the revenue generated from the cards and these agreements can offer financial institutions access to a new group of consumers. Federal banking regulators and the Department of Education have expressed concern over the marketing practices and consumer risk associated with college-sponsored financial products. Research shows that many of these accounts contain high or unusual fees, which can be a worse deal for students than what they can find shopping around on their own.  

Among the issues the CFPB identified:

  • Four out of five colleges did not disclose their credit card marketing contracts on their website: Of the 25 colleges in the CFPB’s sample, 20 did not disclose their contracts on their website. Only seven of these 20 schools published information for the public on how to obtain the agreements—but only two of these schools ultimately provided the agreements upon request. 
  • More than two-thirds of the schools did not provide access to agreements upon request: Of the 20 colleges that did not post agreements on their website, only three provided agreements upon request as required by law. In addition, the Bureau found that most of the schools that published specific instructions for requesting agreements failed to provide access to agreements, even when borrowers followed these instructions.


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