Wednesday, August 20, 2014
Menendez expresses concerns about campus card programs
In an Aug. 12, 2014, letter to the heads of the Department of Education and the Consumer Financial Protection Bureau, Sen. Robert Menendez, D-N.J., called for strong regulations to protect college students against "high and hidden" fees on prepaid debit campus cards, specifically the cards on which students can deposit financial aid funds.
In the letter to Education Secretary Arne Duncan and Consumer Financial Protection Bureau Director Richard Cordray, Menendez said that "many educational institutions are increasingly partnering with financial service providers to deliver student financial aid through campus banking products or campus cards, which typically involve a prepaid card loaded with the student’s financial aid credit balance or a debit card linked to a checking account opened for a student."
Menendez alleged that the relationships between higher learning institutions and campus card providers card companies may not have the best interests of students in mind. “Put simply, students should not be charged extra fees to access their financial aid funds, whether at account opening or later, and schools should not be steering students towards high-fee products,” he wrote.
In the letter, Menendez said campus card regulations should:
- Require clear disclosures of all fees
- Prohibit the most abusive fees, especially overdraft fees
- Require Regulation E protections in case cards are lost or stolen
- Ensure students have the option to receive funds by check or direct deposit to the account of their choice
- Ensure accounts and cards are not linked to, or converted into, credit cards or other credit products
- Strengthen rules to address potential conflicts of interest embodied in institution-campus car provider contracts
- Require strong safeguards and oversight to protect students’ privacy and card account data
The Department of Education is reportedly preparing new rules that will govern the campus card market, especially as it applies to financial aid disbursement services.
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