Students Are Being ‘Ripped Off’ by Wells Fargo-University Deals, Warren Charges

Contending that college students are being “ripped off” by high fees charged by Wells Fargo, Sen. Elizabeth Warren (D-Mass.) is asking college and university officials why they continue to contract with the bank for branded products.

Warren’s letter follows a report by the CFPB that showed that Wells Fargo charged the highest fees among 573 colleges with marketing agreements with credit unions and banks.

Many of those financial institutions pay the colleges and universities fees for the branding.

“While Wells Fargo provided services to about one-quarter of the students with accounts, it collected more than half of all fees paid by college students using sponsored financial products,” Warren said in a letter to college and university officials whose institutions do business with the bank. “In fact, the students at the 30 colleges with Wells Fargo products paid more in total bank fees than the students at the other 543 schools combined.”

The report, prepared in February 2018 but only recently released under the Freedom of Information Act, showed that Wells Fargo charged an annual fee of $46.99 on 304,227 accounts held by students at 30 colleges. Some financial institutions charged no fees, while some, charged lower or no fees. For instance, the agency said the University of Kentucky Federal Credit Union charged an annual fee of $37.00 on 2,570 accounts.

Fees were much higher at financial institutions that paid promotional fees to the colleges and universities.

Bureau officials said they and other government agencies have raised questions about conflicts of interest, adding that as a result of the promotional deals, branded financial institutions with higher fees may be crowding out other credit unions and banks.

Several Democratic senators, including Warren, sent a letter last month to Education Secretary Betsy DeVos, charging that she and the bureau had suppressed the report after it was written.

“It is difficult to discern whether or how the Department is enforcing the requirements of its own regulations to protect the financial interests of students,” the senators wrote.

In a separate letter to Timothy J. Sloan, Wells Fargo president/CEO, Warren charged that the disparity in the fees means that students are being “ripped off” by Wells Fargo.

In an email to CU Times, a Wells Fargo spokesperson wrote, “Wells Fargo is continually working to improve how we serve our customers, including all students and those who participate in our Campus Card program. Before and since the CFPB’s review on this topic, we have been pursuing customer-friendly actions that support students, such as sending automatic zero balance alerts, and removing monthly service fees on our Everyday Checking accounts for customers ages 17-24, a benefit we had already offered to our Campus Card customers.  We will continue to take additional steps to better serve our student customers and help them succeed financially.”