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New Regs Will Change How Colleges Offer Bank Accounts to Students

December 31, 2015

Authors

Bryan Cave

New Regs Will Change How Colleges Offer Bank Accounts to Students

December 31, 2015

by: Bryan Cave

On October 30, 2015, the Department of Education issued regulations to impose requirements on the marketing and terms of deposit and prepaid accounts offered to students at educational institutions that participate in Federal student aid programs. According to the DOE, the regulations are intended to ensure that students have convenient access to their title IV, Higher Education Act program funds, do not incur unreasonable and uncommon account fees on their title IV funds, and are not led to believe that they must open a particular financial account to receive Federal student aid. Most of these new rules take effect on July 1, 2016.

On December 16, the CFPB published a Safe Student Account Toolkit “to help colleges evaluate whether to co-sponsor a prepaid or checking account with a financial institution.” The Toolkit includes a Scorecard that can be used by schools when selecting a third-party vendor for student

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CFPB Continues Scrutiny on Student Loan Servicing

May 26, 2015

Authors

Steven Smith and Greg Sachnik

CFPB Continues Scrutiny on Student Loan Servicing

May 26, 2015

by: Steven Smith and Greg Sachnik

In a recent press release, the CFPB announced a public inquiry into student loan servicing.  The CFPB is seeking information about: “industry practices that create repayment challenges, hurdles for distressed borrowers and economic incentives that may affect the quality of service.”  According to the CFPB, student loans account for the nation’s second largest consumer debt market.  The agency states there are more than 40 million federal and private student loan borrowers and those consumers owe more than $1.2 trillion.  About $240 billion in such loans are either in default or forebearance.

The CFPB is acting because of numerous borrower complaints about their loan servicers.  Complaints include billing problems associated with payment posting, prepayments and partial payments.  Borrowers have stated that payments have been processed in ways that make their borrowing more expensive.  Servicers are also accused of losing records and slow response times to fix errors.  The CFPB thinks

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