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CFPB Banking on Campus Forum: Prepared Remarks of Richard Cordray, Director of the Consumer Financial Protection Bureau
The financial crisis battered so many families who were suddenly less able to pay for the ever-increasing cost of college. The crisis also meant lower revenues for our cities, counties, and states, which ultimately led to cuts for our public colleges and universities, making tuition surge even higher. All of this has led to the total amount of outstanding student debt climbing to nearly $1.2 trillion, according to our latest estimates.
In recent years, Congress has enacted reforms to help students with financial products and services. Universities and colleges can no longer get paid to promote certain lenders of student loans. And universities and colleges have to disclose if they are benefiting by promoting certain credit card companies. These reforms have helped protect students, but they do not apply to other products marketed in partnership with schools, such as debit cards and checking accounts.
The Consumer Bureau wants to help the American people to navigate the consumer financial marketplace more effectively. And I am concerned that some of our colleges and universities, whether well-intentioned or not, may be encouraging or even requiring our young people to use financial products that do not offer the best deals.
For many young people, college is an opportunity to improve their futures by earning a degree and increasing their potential to earn a good salary. But it is also a time for students to see what it feels like to live on their own and begin to face all the tough questions about their financial lives. Questions like, what is a manageable amount of student debt? Where should I open my first bank account? Should I use a credit card to buy my books?
Students and their families trust our colleges and universities for fostering ideas, learning, and betterment. These institutions can greatly influence the decisions that young people make because students want to believe their school looks out for them and puts their interests first.
Unfortunately, trust in higher education can be undermined when schools are not careful about whom they partner with to provide their students with financial products and services. We are distressed to hear that some students feel pressured to use specific products and may be unaware that when they sign up for those products their schools are secretly making money.
In February, the Consumer Bureau released a Request for Information to learn more on this subject. Our goal was to engage with the higher education community about how they structure their marketing partnerships with financial institutions. Today’s forum is a further continuation of this effort.
To date, we have heard from many school officials who are looking for guidance on how to make sure their students start off on the right financial footing. The Consumer Bureau is committed to working with everyone involved to ensure that students and young consumers have the opportunity to make financial choices that are sound and sustainable.
Together, we can chart a path forward to help students better navigate the financial marketplace. And we can help ensure that our nation’s colleges and universities are deserving of the trust that the public places in them. We look forward to today’s forum. Thank you.
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At the Banking on Campus Forum, CFPB Student Loan Ombudsman Rohit Chopra presented initial findings from the CFPB’s inquiry: http://files.consumerfinance.gov/f/201309_cfpb_banking-on-campus-forum.pdf
The CFPB also accepted video testimony from students and other members of the public who were unable to travel to D.C. to for the event. Some of the early submissions of videos from students:
- · Vincent Mendoza, De Anza College
- · Diana Fielding, Hamline University
- · Harris Foster, Oregon Student Association and Student Body President at Portland State University
The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit consumerfinance.gov.