POLITICO claims that the Trump administration has actively covered up a new report that shows Wells Fargo is exploiting college students with high penalties and fees.
The purportedly ‘unpublished’ report was obtained by POLITICO through a Freedom of Information Act request. Written by the Consumer Financial Protection Bureau, the memo has a controversial past.
The administration’s alleged refusal to release it led to the CFPB’s top student loan official resigning. In his resignation letter, Seth Frotman accused the White House of suppressing its publication.
What POLITICO terms a ‘previously unseen analysis’ examined fees tacked onto debit cards and other financial products by over a dozen companies to some 500 colleges across the country. Wells Fargo provided a rough quarter of all the accounts.
Fox News Business explains that Wells Fargo was, in fact, the second-most used bank. It created and maintained about 304,000 accounts nationwide, in contrast to BankMobile’s 808,000.
But despite encapsulating a fourth of the market, Wells Fargo consumed more than half the fees paid by students. POLITICO says that the bank’s average annual fee was $50, considerably higher than any other provider.
Meanwhile, users of BankMobile—a digital-only bank—paid an average of $12.12 per year.
College-provided debit cards are supposed to help students receive financial aid disbursements and better manage their money. The Department of Education requires that colleges ensure such products are “not inconsistent with the best financial interests” of their students.
“Our analysis finds that most students at most colleges are able to use their college-sponsored account fee free,” says the CFPB report, noting that “certain account fees and providers still pose risks to student consumers.”
The report covered spending and fees for the 2016-2017 academic year—and POLITICO says it was made available to the Education Department’s Office of Federal Student Aid in February.
For ten months, the study’s been circulating through the government. But it appears nobody in the Trump administration took action or shared its findings with the public.
An anonymous CFPB spokesperson penned a statement claiming, “The Bureau shared this information directly with the Department of Education.”
It appears that if any action was taken by Education, it wasn’t publicized.
Wells Fargo, meanwhile, has defended its high annual fees by placing the blame on the college students using their products. Spokesperson Jim Seitz said that some “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,” Seitz said. “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 manage their account activity more effectively, and, when possible, avoid incurring added costs.”
Consumer watchdogs say they’re not surprised that the Trump administration hasn’t done much to curb potential abuses by companies like Wells Fargo.
“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,” said Karl Frisch, executive director of Allied Progress. “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 sough to cover it up must be investigated by Congress.”