Senators Warren, Harkin, Durbin & Congressman Miller Join Colleagues to Call On Education Department to Prohibit Harmful Banking Practices Targeting College Campuses
Bicameral Group of Lawmakers Sends Letter to Dept. of Education Standing up for College Students
Washington, DC - U.S. Senators Elizabeth Warren (D-Mass.), Tom Harkin (D-Iowa.) and Dick Durbin (D-Ill.), Congressman George Miller (D-Calif.), and their colleagues in the House and Senate today sent a bicameral letter to Secretary Arne Duncan of the U.S. Department of Education (ED) in support of changes to Title IV's cash management rules, which are currently under revision. The letter urges ED to protect students from unfair banking practices, including campus-sponsored debit cards with terms that are not always good for students, and to preserve the integrity of federal student aid programs.
The letter was signed by 23 members of the House and Senate, including: Senators Barbara Boxer (D-Calif.), Jack Reed (D-R.I.), Sherrod Brown (D-Ohio), Jeff Merkley (D-Ore.), Brian Schatz (D-Hawaii) and Edward Markey (D-Mass.), and Representatives Louise Slaughter (D-N.Y.), Peter Welch (D-Vt.), Chellie Pingree (D-Maine), Alan Lowenthal (D-Calif.), Mike Thompson (D-Calif.), Julia Brownley (D-Calif.), Frederica Wilson (D-Fla.), Yvette Clarke (D-N.Y.), Karen Bass (D-Calif.), Susan A. Davis (D-Calif.), Raul Grijalva (D-Ariz.), John F. Tierney (D-Mass.) and Jared Huffman (D-Calif.).
"Federal financial aid is there to help students. When colleges partner with financial institutions and push students into putting their federal student aid refunds into high fee accounts, it puts our federal investment at risk," the members wrote. "Students should be able to make unbiased choices about the financial products that work best for them."
Earlier this year, the Government Accountability Office and ED's Inspector General raised concerns that colleges are entering into agreements with financial institutions that charge high fees or hidden fees, resulting in gain for the companies, but financial strain for students. The members' letter advocates that: "Colleges should be recommending the financial products that provide the best deal to students, not the biggest financial reward for the institution."
The members specifically urged Secretary Duncan to establish rules that would:
- Ensure students can easily deposit federal financial aid into their personal accounts without delay or penalty. Direct deposit into a student's own account should always be an easy option.
- Prohibit colleges from entering into a preferred relationship with a bank or financial firm to offer debit cards or other financial products that charge fees associated with the disbursement and use of Title IV aid.
- Ensure that students receive neutral and unbiased information about how best to access their federal student aid.
- Ban revenue sharing deals so that colleges select financial products based on their merits alone, not revenue to the college or other considerations.
- Require that colleges post agreements with banks on their websites and annually report them to the government for review by relevant agencies, including the Consumer Financial Protection Bureau.
- Ensure these new rules are applicable to any college-sponsored account into which Title IV funds are transferred or deposited.
The full text of the letter is available here.