Some members of the card industry are questioning the Department of Education's recent proposal to regulate certain debit and prepaid cards. After July 2 – the deadline for public comments – they might have some answers.
The controversy revolves around the department's Program Integrity and Improvement plan, which would overhaul the relationships some financial institutions have with colleges and universities.
Among other things, it would prohibit higher-education institutions from requiring students to deposit their financial aid dollars in accounts with specific financial institutions. It would also establish two types of arrangements between schools and financial institutions: T1 arrangements, which are agreements to process federal aid on behalf of the school and offer accounts to students and parents, and T2 arrangements, which involve agreements to market those accounts directly to students and their parents.
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