LAKE COUNTY — Congressman Mike Thompson (CA-5) joined colleagues in the House and Senate in sending a letter to Secretary Arne Duncan of the U.S. Department of Education (ED) urging the ED to protect students from unfair banking practices, including campus-sponsored debit cards with terms that are not always good for students, and preserve the integrity of federal student aid programs.
According to the letter, “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. Students should be able to make unbiased choices about the financial products that work best for them.”
The letter was signed by 23 members of the House and Senate.
Earlier this year the Government Accountability Office and ED”s Inspector General, Kathleen Tighe, also 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.”
In the letter, the members specifically urged 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.
