More Lawmakers Try to Influence DOE on Campus Card Rules (Aug. 13, 2014)
Letter writing among U.S. lawmakers has been fast and furious lately as they try to influence how the U.S. Department of Education handles new rules governing universities’ and colleges’ arrangements with financial service providers that deliver financial aid dollars. Sen. Mike Crapo (R-Idaho), yesterday sent a letter to DOE Secretary Arne Duncan expressing concern that the rules being considered could create “burdensome regulation on traditional banking products, which ultimately may force financial institutions to exit campus markets, leading to diminished student choice, restricted convenience and more unbanked young people.”
A day earlier, Sen. Robert Menendez (D-N.J.) wrote that strong consumer protections are needed for students regarding campus cards in a letter he sent to Duncan and CFPB Director Richard Cordray. “Students need strong protections relating to the fees they can be charged to access their financial aid funds, fair choice in how funds are delivered, protection from potential conflicts of interest for a university or its officials and privacy of student information,” wrote Menendez, who has been critical of prepaid products in the past. Of note, Menendez’s discussion of fees is not restricted to student prepaid cards, but all prepaid cards: “The [DOE] and CFPB can … [require] clear disclosures of all fees and prohibiting the most abusive fees—especially overdraft—for all prepaid cards and other accounts established in connection with the financial aid process or relationship with the school and receipt of student aid funds.”
The tone of Menendez’s letter is quite different from the one sent to the DOE last month, written by Rep. Blaine Luetkemeyer (R-Mo.) and Sen. John Hoeven (R-N.D.), and signed by more than 40 lawmakers from both sides of the aisle, which stated that restrictions on campus debit cards being considered by the U.S. Department of Education have the potential to be too far-reaching and severely limit students’ access to financial services.
Amid the swirl of lawmaker correspondence, the CFPB posted on its blog this month that it has examined the universities in the Big Ten Conference to determine whether they have appropriately disclosed their agreements with financial institutions regarding the financial products they offer their students.
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