WASHINGTON — Two prominent Democrats asked the Consumer Financial Protection Bureau to examine fees charged to college students who receive financial-aid disbursements on their debit cards.
The request by Sen. Richard Durbin, D-Ill., and Rep. George Miller, D-Calif., came on the heels of a study by the U.S. Public Interest Research Group highlighting those fees and identifying close to 900 partnership agreements between colleges and financial institutions.
“If managed and used appropriately, debit cards can be an effective way to disburse student aid. However, much to our concern, U.S. PIRG asserts that more than 9 million students across the country are at risk because these debit cards may come with high user fees, hidden transaction costs and insufficient consumer protections,” the two Democrats wrote in a letter to CFPB Director Richard Cordray and Kathleen Tighe, the Education Department’s inspector general.
Campus-based debit cards allow students to access the portion of their financial aid that can be used to buy books or for other educational expenses beyond the student’s tuition. But they often carry a range of fees that are hard for students to avoid, the study said.
Durbin and Miller want the CFPB to look into nine specific issues, including the average amount that students with campus-based debit cards pay in fees and penalties, and whether there is a conflict of interest for the colleges that enter into the agreements.
The two members of Congress also sent a separate letter to Education Secretary Arne Duncan, stating that his department should stop and deter unscrupulous student financial aid practices.