DOE rulemaking on student aid disbursement reported to be stalled

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As we reported last month, the Department of Education (DOE), with active CFPB participation, is currently engaged in a negotiated rulemaking process that is considering, among other things, revisions to the DOE’s Title IV’s cash management rules (34 CFR 668, Subpart K), including those relating to acceptable methods of disbursement of eligible Title IV funds to students (34 CFR 668.164). According to a Bloomberg article by Carter Dougherty, those negotiations have now stalled over a DOE proposal to ban most fees on student accounts.

The article reports that a draft regulation distributed by the DOE would protect students from “any costs” associated with opening, maintaining or closing a “sponsored account” and guarantee them at least four free ATM withdrawals a month. The article states that the negotiations have stalled over the definition of “sponsored account.” It indicates that consumer groups want the term to cover all accounts that students open with banks that have college marketing agreements while banks want to limit the term to accounts that are specifically opened to channel Title IV funds. 

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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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