Victory! Dept of Ed Proposes Tough New Rules for Campus Banking Products
By Consumers Union on Friday, May 15th, 2015
Good news for college students! Today, the Department of Education announced proposed regulations to crack down on aggressive marketing practices and high fees associated with campus banking products. These accounts can be aggressively pushed onto students as the “preferred” option for receiving financial aid and managing money, only to end up nickel-and-diming students out of their money with harmful account fees.
The Department’s proposed rules would require schools to make sure that students have a neutral menu of options to choose from when deciding how to receive their financial aid, and make it easier for students to opt for direct deposit to accounts they already have. In addition, accounts marketed during the disbursement process – like the much-scrutinized Higher One accounts – must have no fees for overdrafts or point-of-sale transactions.
Over the past few years, schools have increasingly entered into arrangements with financial institutions to disburse financial aid dollars, as well as market banking and prepaid accounts to students. These school-bank partnerships can help schools cut costs, but can also expose students to aggressive marketing tactics, high or unusual fees, and restricted choices for managing their money. Our Consumer Reports investigation last year found that some of these accounts came with fees that added up quickly if you used them frequently, and also found that important information about the accounts was often difficult to find.
Members of the public can comment on the proposal for 45 days. Check this website for details. If you’ve had an experience with a campus account, make your voice heard!