As the Department of Education conducts the regulatory review mandated by President Trump, the American Bankers Association and the Consumer Bankers Association yesterday urged the department to revisit the overly expansive final rule targeting campus bank accounts that the Obama administration finalized in October 2015.
The final rule limits the kinds of arrangements colleges can make with banks that disburse funds to students from federally guaranteed student loans. It imposes significant restrictions on bank accounts that are offered to students under an arrangement between the bank and college or university — accounts that are low-cost or free and are often tailored to students’ needs. The rule applies whether or not the student receives student aid. The rule also imposes unnecessary and costly public disclosure requirements on accounts that do receive student aid.
“[T]hese sections will exacerbate, not resolve, concerns related to student access to [student aid]funds and access to bank products and services by imposing a new and burdensome layer of regulatory complexity and uncertainty that may drive financial institutions to abandon the student bank account market, increasing students’ costs and reducing competition, availability, and student choice,” ABA and CBA warned, adding that campus banking products usually feature lower fees than non-campus accounts. Furthermore, ABA and CBA argued that the department lacked statutory authority for objectionable provisions of the final rule. For more information, contact ABA’s Nessa Feddis.