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A year ago, the Consumer Financial Protection Bureau (CFPB) put a limit on how much credit card companies could charge consumers for late payments. On Tuesday, the Trump administration quashed that limit, opening the door for financial institutions to once again gouge late-paying customers. The Biden-era rule capped late fees at $8, substantially less than what many credit card companies used to charge. But in a federal court filing in Texas, Trump’s CFPB asked a judge to terminate the rule, saying it had changed its mind and now agreed with banking groups that the rule was illegal. U.S. District Judge Mark Pittman (a Trump appointee during his first term) agreed to the request Tuesday afternoon. Pittman had previously blocked the rule from being implemented, saying it violated the 2009 Credit Card Accountability and Disclosure Act, which regulated excessive fees, but allowed card companies to impose “penalty” fees for late payments. The decision to do away with the late-payment fee cap is a further dismantling of Biden’s initiatives. Trump has been vocal about wanting to disband the CFPB altogether, but judges have so far blocked him from doing so, saying he could lay off workers but not eliminate the agency. Initial opposition to the rule came from a coalition of six business and banking groups including the U.S. Chamber of Commerce and American Bankers Association. Opponents of the rule celebrated the judge’s ruling. We welcome todays court decision vacating the CFPBs credit card late-fee rule,” the groups said in a joint statement. “This is a win for consumers and common sense.” Under the CARD Act, credit card companies are allowed to charge a maximum fee of $41 for a missed payment, even if the cardholder is only late by a few hours. The Biden-era CFPB had argued there was no evidence that those fees deterred future late payments. Worse, it said, the fees were often accompanied by other penalties, such as loss of grace periods, interest due, and drops in credit scores. Consumer Reports, at the time the cap was enacted, estimated late fees cost Americans more than $14 billion per year. A 2022 report from the CFPB found that 18 of the largest 20 credit card companies were charging the maximum $41 fee, while smaller banks and credit unions were more likely to charge $25 or less. Under Biden, the CFPB estimated the cap could save Americans $9 billion per year. More fees are returning The court ruling comes as another “junk fee” consumer protection seems likely to fall. The House and Senate have both previously voted to repeal the CFPB’s limits on excessive bank-overdraft fees as well. Consumer Reports estimates consumers will lose $5 billion in annual savings with that cap gone. Repealing the CFPBs limits on overdraft fees gives big banks the green light to rip off their customers with excessive charges that far exceed the cost of covering the transaction, said Chuck Bell, advocacy program director at Consumer Reports, last week when the House voted to repeal the limit. “Banks will be able to continue penalizing customers with steep fees even though most overdrafts are for small amounts that are repaid within a few days.” Overdraft fees fall most heavily on consumers with low- and moderate-income levels as well as have an outsize impact on people of color, according to Consumer Reports. Black consumers are 69% more likely than white consumers to live in a household that is charged at least one overdraft or insufficient-funds fee per year. Hispanics are 60% more likely to face the fees.
Category:
E-Commerce
Harvard is the first university to reject President Donald Trumps demands, which require the university to make sweeping changes in order to keep its $2.2 billion in federal funding, and is subsequently now facing a freeze of those funds, which the university has called both unlawful and unconstitutional. The governments demands follow a review of nearly $9 billion in federal funding to Harvard, and come amid a broad crackdown on college campuses aimed at axing DEI and limiting free speech, under the guise of eliminating so-called left-wing ideology and antisemitism. Harvard faculty have sued to block Trump from pulling their funding, and filed a temporary restraining order labeling the threats a “gun to the head.” Harvard’s act of resistance brings up two very different but important questions, one political, and one financial: Will this set a precedent for other universities to follow, and where does Harvard get its funding, anyway? What does Harvard’s decision mean for other universities? First things first: Harvard University didn’t just quietly reject Trump’s overreach. President Alan Garber made a bold show of resistance, in a letter to the campus community, stating that the government’s demands “violate Harvards First Amendment rights and exceeds the statutory limits of the governments authority under Title VI,” and that “no governmentregardless of which party is in powershould dictate what private universities can teach, whom they can admit and hire, and which areas of study and inquiry they can pursue.” Some commentators have said Harvard learned from Columbia University’s mistake. In caving to Trump‘s demands, Columbia will be forced to acquiesce in a number of ways, including hiring three dozen campus officers “who will have the ability to remove individuals from campus and/or arrest them when appropriate.” The administration also has paused federal funding for the University of Pennsylvania, Brown University, Princeton University, Cornell University, and Northwestern University, according to the AP. Former President Barack Obama praised Harvard’s decision and encouraged other institutions to do the same. As The New York Times noted, Harvard’s stance could set a precedent for other universities, and empower law firms, the media and courts, and other targets to also push back. (In fact, on Tuesday, Columbia’s president released a statement seemingly backtracking and perhaps following Harvard’s lead: “We have not reached any agreement with the government at this point [. . .] We would reject any agreement in which the government dictates what we teach, research, or who we hire.”) Where does Harvard get its money? This leads us to our second point, where does Harvard get its funding? It might come as a surprise, but while Harvard has a vast endowment of $53.2 billion, it relies on several other sources beyond that for its funding. These include federal and non-federal research grants, tuition and fees, and gifts from alumni and others. Harvard received approximately $2.4 billion from its endowment in fiscal 2024, which made up only 37.5% of its overall operating budget of $6.4 billion. The university’s $686 million in federal funding representing roughly 16% of its operating revenue. However, Harvard can only tap 20% of its endowment for discretionary spending, to go toward the money lost by Trump’s freezes. A majority of the endowment distributions are restricted by donors, both legally and from stipulations from donors, in regard to how Harvard can spend that money. Another way Harvard is able to cover its high costs is that it does not pay federal or state taxes. Many people don’t know that Harvard, and most major colleges and universities, are tax-exempt organizations. On Tuesday, Trump threatened to eliminate Harvard’s tax-exempt status in a post on Truth Social, saying, “Perhaps Harvard should lose its Tax Exempt Status and be Taxed as a Political Entity if it keeps pushing political, ideological, and terrorist inspired/supporting Sickness?'”According to its website, Harvard is exempt from federal income tax as an educational institution under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended. As an educational institution, Harvard is also exempt from state income tax in Massachusetts, where it is located.
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E-Commerce
Harvard University is the latest in a growing list of higher education institutions that had its federal funding targeted by the government in order to comply with the Trump administration’s political agenda. The series of threats and subsequent pauses in funding to some of the top U.S. universities have become an unprecedented tool for the administration to exert influence on college campuses. Six of the seven universities impacted are Ivy League schools. President Donald Trump vowed to pursue these federal cuts on the campaign trail last year, saying he would focus on schools that push critical race theory, transgender insanity, and other inappropriate racial, sexual, or political content. Public school systems are targets for cuts too. Here’s a look at which universities have been pressured by the administration’s funding cuts so far. Harvard University The administration announced its antisemitism task force would conduct a comprehensive review of the Massachusetts university on March 31. The government was set to review nearly $9 billion of federal grants and contracts. Harvard is among universities across the country where pro-Palestinian protests erupted on campus amid the war in Gaza last year. Republican officials have since heavily scrutinized those universities, and several Ivy League presidents testified before Congress to discuss antisemitism allegations. The administration issued its list of demands to Harvard in a letter on April 3. The demands included a ban on face masks, limitations on campus protests and a review of academic departments biases. About a week later, those demands were expanded to include leadership reforms, admission policy changes and stopping the university’s recognition of certain student organizations. Then, on Monday, Harvard President Alan Gerber refused to comply, saying in a letter that the university will not surrender its independence or relinquish its constitutional rights. Hours later, the administration announced it froze more than $2.2 billion in grants and $60 million in contracts to the university. Cornell University The White House announced last week that it froze more than $1 billion of Cornell’s federal funding. The administration said the freeze came as it investigated alleged civil rights violations at the university. The New York university was among a group of more than 60 universities that received a letter from the Education Department on March 10 urging them to take steps to protect Jewish students or else face potential enforcement actions. The Defense Department issued more than 75 stop-work orders for research, Cornell said in a statement, but that the federal government hadn’t confirmed if the total funding freeze totaled $1 billion. Northwestern University Like Cornell, Northwestern also saw a halt in some of its federal funding last week. The amount was about $790 million, according to the Trump administration. The Illinois university did not receive an official message from the White House on the freeze despite its cooperation with civil rights investigations, according to Northwestern officials at the time. University spokesperson Jon Yates said Northwestern’s scientific research was at jeopardy because of the freeze a widespread issue for universities facing research cuts from the National Institutes of Health. Brown University The Trump administration was anticipated to pause federal grants and contracts at Brown University because of the Rhode Island school’s response to alleged antisemitism on campus, according to a White House official on April 3. The total was expected to be about $510 million in funding, according to the official. Princeton University Dozens of research grants were suspended at Princeton University without a clear rationale, according to an April 1 campus message from university president Christopher Eisgruber. The grants came from federal agencies such as the Department of Energy, NASA and the Defense Department. Before the funding pause, Eisgruber had expressed his opposition to Trump’s threatened cuts at Columbia University in an essay in The Atlantic magazine. He called the administration’s move a radical threat to scholarly excellence and to America’s leadership in research.” University of Pennsylvania Unlike the other targeted universities, the University of Pennsylvania saw funding cuts because of a transgender athlete who competed in Penn’s swimming program, according to the Trump administration. After a Feb. 5 executive order barring transgender athletes from participating in women’s and girls’ sports, the Education Department launched an investigation a day later into athletics programs at Penn and San Jose State University. The Penn investigation centered on Lia Thomas, who is the first openly transgender thlete to win an NCAA Division I title and graduated from the university in 2022. Over a month later, the White House announced the suspension of about $175 million in federal funding from the Defense Department and the Department of Health and Human Services. The administration said the halt in funding on March 19 came after a separate discretionary federal money review. The university said at the time that it wasn’t directly notified of the action. Columbia University Columbia University was the first major institution that had its funding singled out by the Trump administration. At first, federal agencies declared they were considering stop-work orders for about $51 million of contracts with Columbia on March 3. Trump had also said on social media that schools that allow illegal protests would see funding cuts. Last year, Columbia student protesters started a wave of campus demonstrations against Israel’s military campaign in Gaza. The protests led to tense faceoffs with police at the New York City university and the arrests of more than 100 demonstrators. University leadership faced scathing condemnations from Republicans on the protests’ proliferation, leading former president Minouche Shafik to step down. Columbia also began investigating pro-Palestinian student activists, such as Mahmoud Khalil, who was later arrested and is at threat of deportation. On March 7, the Trump administration cancelled about $400 million of Columbia’s federal funding. Columbia took some action afterward, such as expelling and suspending some student protesters who occupied a campus building during demonstrations. The university announced March 21 that it had agreed to make even more sweeping policy changes that the Trump administration had demanded. The changes included placing the Middle East studies department under supervision, hiring new safety personnel who can make arrests, and banning face masks for the purposes of concealing one’s identity. The university also agreed to appoint a senior provost tasked with reviewing several international studies departments’ leadership and curriculum. Armstrong resigned from her post the following week. The decision was met with dissatisfaction among some faculty members and a lawsuit against the cuts. But following Harvard’s defiance of the Trump administration’s demands, Columbia’s acting president, Claire Shipman, had a new message Monday. She said that while she agrees with some of the administration’s requests, the university would reject heavy-handed orchestration that would require us to relinquish our independence and autonomy as an educational institution. Discussions were still ongoing between the federal government and Columbia as of Monday, according to Shipman’s campus letter. Makiya Seminera, Associated Press
Category:
E-Commerce
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