October 20, 2016
Authored by: Bryan Cave Leighton Paisner
As previously discussed on BankBryanCave.com, new Department of Education regulations will impact the terms and conditions of bank accounts that institutions of higher education and postsecondary vocational institutions may offer to students to receive disbursements of Title IV Higher Education Act funds. While the regulations apply directly to colleges, many banks and third-party servicers will need to change their products, services and practices if they want to contract with colleges to offer accounts to students.
The DOE rules require covered colleges to ensure that student account terms are in the best financial interest of students, present Title IV fund disbursement and account options to the student in a fact-based and neutral manner, and ensure that students have access to an appropriate number of surcharge-free ATMs. The rules also prohibit many account fees and impose ongoing monitoring obligations on colleges to ensure that student accounts meet all requirements of the rules.
The CFPB’s new prepaid account rules will further regulate accounts offered to students by imposing Regulation E protections on those prepaid accounts, limiting overdrafts, and highly regulating other credit features on student prepaid accounts. CFPB enforcement actions against colleges relating to consumer financial products and services remind us that even colleges can be subject to their jurisdiction and enforcement efforts.
On November 18, 2016 at 1:00pm EST, Bryan Cave LLP partner, John ReVeal, will be conducting a webinar with Lorman Education Services to summarize the new DOE rules and the key CFPB prepaid account rules as they relate to student accounts. With John as a faculty member, we are able to offer a 50% discount on the registration fee. Click here for more information, here for the brochure of the webinar, and here to register.