On May 9, the Department of Education (DOE) published a request for information (RFI) concerning disclosures for student financial accounts and is accepting comments through June 9. The RFI follows the DOE’s establishment of new rules regarding financial accounts marketed to students receiving Title IV program funds under the Higher Education Act of 1965. Those rules required, among other things, that colleges and universities provide students with a list identifying the major features and commonly assessed fees associated with any financial account offered by the school under an arrangement with either a third-party servicer or a financial institution, as well as the URL where the complete terms and conditions of each such account may be obtained.
In its preamble finalizing the new rules, however, the DOE also committed to working with the CFPB to ensure the DOE’s disclosure obligations did not conflict with the CFPB’s final rule for prepaid accounts. After consultation with the CFPB, the DOE has decided that in cases where an account provided to a student qualifies as a prepaid account under the CFPB’s rule, then the college or university’s use of the short-form disclosure established by the CFPB would be in compliance with the applicable portions of the DOE’s rule relating to identification of major account features and commonly assessed fees as well.
However, the DOE also notes in the RFI that it would recommend that colleges and universities, in addition to using the CFPB’s short form disclosure, incorporate a compulsory use statement in light of the requirement in the DOE’s rule that schools disclose in writing that students do not need to use a particular account to receive their federal student aid. Notably, while the CFPB’s prepaid accounts rule generally does not allow for any deviation from the required elements of the short-form disclosure, the commentary to the CFPB’s rule does provide that in the case of student cards, providers may incorporate a compulsory use statement. Thus, it would appear to complying with the DOE’s recommendation with respect to including a compulsory use statement would not cause a provider to fall out of compliance with the CFPB’s rule.
The DOE is seeking feedback on the RFI through June 9. Importantly, colleges and universities are required to comply with the provisions of the DOE’s rule requiring them to provide students with a list identifying the major features and commonly assessed fees associated with any financial account by the RFI on July 1, 2017.
- DOE Releases Q&As on Title IV Disbursement Rule
- DOE Publishes Final Rule for Title IV Funds Disbursement
- CFPB Takes Aim at Accounts Marketed to College Students