May 23, 2014

Harkin, Miller introduce bill on college-bank partnerships

May 27, 2014 – Sen. Tom Harkin, D-Iowa, and Rep. George Miller, D-Calif. introduced companion legislation aimed at increasing regulation on partnerships between banks and colleges, specifically the debit cards used to disburse financial aid.

The announcement came weeks after the lawmakers, along with Sen. Elizabeth Warren, D-Mass., sent a letter to Education Secretary Arne Duncan urging him to curb the practice of colleges partnering with banks to offer students deals, such as debit cards, over the concern that students' federal financial aid is going toward paying higher fees instead of schooling.

The letter referenced a February study by the Government Accountability Office that found "roughly 40 percent of all college students are enrolled at schools that have deals with banks to market debit cards to them."

NAFCU will study the legislation and monitor its progress for its potential effect on credit unions, particularly in increasing the regulatory burden on the industry and duplicating efforts from other agencies.

Last year, CFPB launched an inquiry about card-based financial products offered to college students on campus, including products offered by federally regulated financial institutions such as credit unions. NAFCU submitted a comment letter to the bureau explaining credit unions' offerings of member-tailored products, financial resources and responsible financial education for college-aged members.