Democratic Lawmakers Urge Education Department To Alter School-Sponsored Debit Card Rules

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On April 22, Senator Elizabeth Warren (D-MA), Congressman George Miller (D-CA) and 22 other lawmakers sent a letter to Department of Education (DOE) Secretary Arne Duncan, supporting the DOE’s ongoing efforts to revise its rules that govern the ways higher education institutions request, maintain, disburse, and otherwise manage federal student aid disbursements. The DOE is considering changes that would, among other things, clarify permissible disbursement practices and agreements between education institutions and entities that assist in disbursing student aid, and increase consumer protections governing the use of prepaid cards and other financial instruments. The lawmakers specifically called on the DOE to “mandate contract transparency, prohibit aggressive marketing, and ban high fees when colleges partner with banks to sponsor debit cards, prepaid cards, or other financial products used to disburse student aid” through rulemaking that would, among other things, (i) prohibit colleges from entering into preferred relationships with financial institutions to offer debit cards or other financial products that charge fees associated with the disbursement and use of federal student aid; (ii) ban revenue sharing deals between colleges and financial institutions; and (iii) require colleges to post agreements with banks on their websites and report them to the CFPB and other government agencies annually.

Topics:  Colleges, Debit Cards, Department of Education, Prepaid Payment Products, Students, Universities

Published In: Education Updates, Elections & Politics Updates, Finance & Banking Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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