WASHINGTON —There has been a near-70% decline in college credit card agreements since Congress passed new disclosure requirements in 2009, according to analysis released by the Consumer Financial Protection Bureau.
But that doesn’t mean issuers aren’t pushing plastic on campuses and that disclosures have become any clearer, the CFPB said.
“These findings highlight the trend of marketing partnerships between colleges and financial institutions shifting from credit cards toward other products such as debit and prepaid cards, which generally have fewer sunshine protections,” said the CFPB of the findings in a new report. “The report also found that most colleges with credit card agreements do not make those agreements readily accessible to students and families.”
Citing a lack of transparency in the student loan and credit card markets, in 2009, Congress passed the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act, which requires issuers to disclose to the CFPB the terms and conditions of any college credit card agreement, the number of new credit card accounts, and the compensation paid by issuers to institutions of higher education in the previous year. In order for students and the public to identify marketing agreements currently in effect, Congress further required that colleges and universities also publicly disclose these agreements.
In researching its report, the CFPB said it found:
- College credit card agreements continue to decline. In recent years, there has been a steady decrease in both the number of college credit card agreements and open accounts. In 2009, some 1,045 agreements were in effect. Since the CARD Act went into effect, however, the number of agreements has decreased by nearly 70%, the CFPB said, to the point that only 336 agreements were in effect by the end of 2013.
- Credit card issuers paid over $84 million to colleges and universities in royalties and bonuses for agreements in 2009. That amount dropped to approximately $43 million in 2013.
- College debit and prepaid card agreements are now more common than credit card agreements: According to a report from the Government Accountability Office, there were at least 852 schools that had agreements with companies to market debit or prepaid cards to students in 2013. “Unlike credit cards, these products do not have specific requirements in federal consumer financial laws to disclose their marketing partnerships,” the CFPB said.
- College credit card agreements are not readily accessible, according to the CFPB, which said it reviewed 35 college and university websites to determine if they made their credit card agreements easy for students and families to find and access. The CFPB said 80% of these institutions—28 of 35—do not put their agreements, or information about how to request them, on their websites.
The CFPB said that in addition to credit card agreements, it is closely monitoring the marketing arrangements many colleges and universities have with financial institutions related to deposit accounts, prepaid cards, debit cards, and other financial products.
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