WH Hid Report Showing That Wells Fargo Charged Excessive Fees To Students

Ted Eytan/CC BY-SA 2.0/Flickr

The Consumer Financial Protection Bureau report was only made public after a freedom of information request.

A government report detailing exorbitant fees charged to college students by banks was hidden by the Trump administration for months, according to CNN, until a freedom of information request forced officials to turn over the documents.

Wells Fargo, one of America’s largest banks, reportedly was the worst offender, charging higher fees on average than any other financial institution examined.

The report, which was done by the Consumer Financial Protection Bureau, was only released publicly only last week after consumer advocacy groups submitted freedom of information requests for the document. A copy was sent from the agency to the Department of Education in February.

Seth Frotman, the former student loan ombudsman at the Consumer Financial Protection Bureau, had accused agency heads of burying the report when he quit in protest earlier this year.

"When new evidence came to light showing the nation's largest banks were ripping off students on campuses across the country by saddling them with legally dubious account fees, bureau leadership suppressed the publication of a report prepared by bureau staff," Frotman wrote in his resignation letter.

According to the report, banks that pay colleges for promotion of their services tend to charge higher fees than financial institutions that don’t make such a deal.

The report reviewed accounts at nearly 600 colleges that had partnered with banks for student promotions. Some banks paid colleges based on the number of students who opened accounts, the report said. Though most most students who signed up for these accounts did so without accruing fees, certain banks "pose a risk to student consumers," according to the report.

Financial institutions that did not pay colleges for promotion charged $11.93 in account fees on average over a 12-month period. But students paid an average of $36.52 in fees to banks that paid colleges for their sponsorship. Students who had accounts with Wells Fargo paid the most -- an average of almost $47.

Wells Fargo spokesman Jim Seitz told CNN that average costs vary by school and that some students have more fee-eligible needs than others.

But the Consumer Financial Protection Bureau report makes no mention of whether Wells Fargo serves more students with such needs, which include sending wires or buying checks, than the other banks.

Democrats, who take control of the House next month, could start an investigation. At the time Frotman resigned, Virginia Democratic Rep. Bobby Scott, a senior member of the House Education Committee, said his allegation that the bureau was hiding the report was "disturbing" and "warrants immediate investigation."

Read more.

Comments