Dept. of Education finalizes regulations for college accounts
WASHINGTON (10/28/15)--The U.S. Department of Education announced final regulations Tuesday on college debit and prepaid cards. The rules would require institutions to make changes to how fees, including overdraft fees, are charged if a student selects an account offered directly or indirectly by contractors that assist institutions in making direct payments of federal student aid.
According to the Education Department, students will now be able to choose how to receive federal student aid refunds and be given information about financial aid disbursements options. It also will eliminate fees to access federal student aid.
The regulations also:
Prohibit institutions from requiring students or parents to open a certain account into which their student aid refunds are deposited;
Require an institution to provide students with a list of account options that the student may choose from to receive their student aid refunds;
Require institutions to ensure that electronic payments made to a student's preexisting account are made as timely as, and no more onerous to the student than, payments made to accounts marketed through the institution; and
- Allow institutions to share limited student information with third-party servicers that offer financial products to allow the continued functioning of disbursement processes, while also protecting private student information, such as Social Security numbers.
The final regulations come after attempts to draft a proposal through the Department of Education’s negotiated rulemaking authority. The authority allows an agency to invite members of interested groups to meetings where an attempt is made for consensus on the proposed rule. If it is successful, the agency may use those ideas as the basis for a proposed rule.
Working closely with CUNA during the process, Paul Kundert, president/CEO of UW CU, Madison, Wis., participated in that attempted rulemaking process, which took place last year.