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Chris Lindstrom 617-308-1063
(Washington, DC) The U.S. Department of Education proposed today a rule that protects students from high fees, aggressive marketing, and lack of transparency in financial aid debit accounts that affect over 9 million college students. Students have been pushed into these accounts with biased marketing that is hard to opt out of, and then hit with unusual and unexpected fees, such as per-swipe fees and inactivity fees, which are docked out of their limited financial aid dollars. U.S. Public Interest Research Group’s Higher Education Program Director Christine Lindstrom served on the rule-making panel that led to this draft rule, and made this statement in reaction to the proposal:
“The U.S. Department of Education stood strong against the banks and financial firms that abuse financial aid recipients on campus through unfair campus banking arrangements. Banks do not use these tactics in the banking marketplace off-campus and there should be zero tolerance for these tactics on campus, given students’ financial vulnerability and overall debt burden.”
“The rule ensures that students are able to make their choice of where to send their financial aid dollars in a way that does not steer them toward one particular option over another. Significantly, one marketing practice that is eliminated is that of pre-mailing a debit card to students before they have had a chance to opt in to the account. Additionally, the rule delivers critical transparency measures by requiring that all banking arrangements between banks and financial firms, and campuses, are publicly disclosed. Students sometimes resort to protest to get access to these deals but this rule will ensure sunlight.”
“Finally, the rule bans some of the worst, most predatory fees that students encounter in these deals, and, necessarily, enables students to get to their aid dollars for free. Unfortunately, the rule did not ban overdraft fees on all campus-affiliated bank accounts, despite that fact that young adults are far more likely to overdraft than other consumers.”
“We are thrilled with the U.S. Department of Education’s draft and we will work in the next month and a half to preserve some of these necessary reforms and to completely eliminate unfair fees in campus bank accounts.”
U.S. PIRG is a consumer group that stands up to powerful interests whenever they threaten our health and safety, our financial security, or our right to fully participate in our democratic society.
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