On March 30, NACUBO submitted comments to the Consumer Financial Protection Bureau (CFPB) regarding its proposed Safe Student Account Scorecard, a template for colleges and universities to use when issuing requests for proposals (RFPs), which include provision of financial accounts for students. In its letter, NACUBO expressed a number of concerns and offered suggestions for improvement.
Based on a template developed by the Federal Deposit Insurance Corp. for banks offering accounts targeted to low- and moderate-income consumers, CFPB’s Safe Student Account Scorecard is intended as a tool to help institutions set parameters for student financial accounts sponsored by—or otherwise connected to—the institution, and to compare offerings. Its use would be voluntary.
The template involves 10 questions requiring a response from financial institutions (bidders). The questions cover fees and features of the student bank account, additional services available, marketing practices, and transparency about the contract terms.
The tool can be included in an institution’s request for proposal when seeking a partner to offer bank accounts to its students.
In some of the questions, CFPB seemed to suggest that colleges impose certain requirements on financial institution partners. These requirements resemble consumer transparency and marketing proposals made by consumer representatives and others to earlier CFPB proposals, and during recent Department of Education meetings on its cash management rules.
Debit Card Best Practices
In its comment letter, NACUBO referenced its 2012 best practices guidance, Safeguarding Student Finances: Guidance for Campuses Offering Student Debit Card Options (see sidebar “Further Guidance for Student Finances”). The document encourages colleges and universities to place the well-being of students first and use competitive bidding processes when selecting financial partners.
Additional comments address marketing practices, ATM access, contract transparency requirements, and information and tools to assist institutions in comparing proposals from banks.
NACUBO’s letter on the proposed scorecard concludes, “We believe that—done right—an account scorecard included as part of an RFP could be beneficial to higher education institutions, banks, and ultimately students. If colleges and universities use a standard format to gather information about features and fees for student accounts from financial institutions, it makes it easier for banks to provide that information. Additionally, schools lacking resources to develop their own RFPs will find the model account scorecard helpful as they contemplate entering into an agreement with a financial institution.”
ED to Propose New Cash Management Rules
Student banking and debit card arrangements were at the forefront during the 2014 negotiated rulemaking committee meetings, convened by the Department of Education to review its cash management regulations, state authorization for distance education and foreign campuses of domestic institutions, and several other topics. Shortly before the rulemaking committee convened, the Government Accountability Office had released a detailed report on college debit cards, and CFPB held a forum on relationships between financial institutions and colleges and universities.
During the rulemaking discussion, NACUBO representatives and other members of the committee defended the current 14-day limit for disbursing Title IV credit balances, explaining that institutions use that time to ensure student eligibility and the accuracy of the amounts. However, most of the discussion on these issues centered on the following:
- Relationships between banks and institutions (including those not tied to student aid).
- Use of third-party servicers and various types of debit card arrangements to disburse aid to students.
- Transparency about such arrangements, ensuring student choice.
- Access to ATMs.
Because the negotiated rulemaking panel did not come to consensus last year on proposed rules, the department is free to propose regulations as it wishes. We expect to see ED’s proposed cash management rules within the next several weeks.
RESOURCE LINK For further information, visit the Debit Cards and Campus Banking Products page at www.nacubo.org.