BankMobile remains the largest provider of Title IV funds disbursement services under T1 arrangements with colleges, according to a new report from the Consumer Financial Protection Bureau (CFPB). BankMobile had approximately 750 university partners as of 2021, and more than $13 billion in disbursements that year. Colleges paid BankMobile more than $3 million for the 2021-2022 award year, with an average payment amounting to $8,155.
In T1 arrangements, colleges typically pay a provider to process federal financial aid disbursements. Payments typically include subscription fees, monthly account maintenance fees per user, and fees per disbursement.
In the 2021-2022 award year, financial institutions generated more than $15 million in fees from these accounts, with accountholders paying an annual average of $26.50 in fees. BankMobile, the dominant player, charged higher-than-average fees, at more than $28 per accountholder. Huntington Bank had the lowest annual fees, averaging less than $2 per accountholder.
BankMobile is a fairly recent entry into this space. It began as a subsidiary of Customers’ Bank in 2015 before acquiring former-T1 services provider Higher One the following year. By 2021, BankMobile estimated that it had access to one in three college students in the U.S. through its campus partnerships.
Credit Card Partnerships
This was the 12th annual CFPB report to Congress on college banking agreements, which is mandated by the CARD Act of 2009. Among the highlights in this year’s study:
- In 2022, credit card issuers paid nearly $20 million to colleges and affiliated organizations for partnerships. The average annual payment was roughly $138,000.
- The CFPB’s review identified 143 partnerships between colleges or affiliated groups such as alumni associations and credit card issuers. This market is dominated by the alumni associations, who make up more than two out of three of all college card accounts.
- During the 2021-2022 award year, financial institutions generated over $17.3 million in revenue from more than 650,000 student bank accounts.
- The amount of fees charged to students annually varies by institution type, Accountholders at Historically Black Colleges and Universities, for-profit colleges, and Hispanic-servicing institutions end up paying higher-than-average fees per account than other schools.
- Credit card marketing practices no longer rely as heavily on in-person marketing as they did when the CARD Act was passed in 2009.