The Department of Education may be just weeks away from issuing new rules that would overhaul how credit unions and banks work with colleges and universities. However, the fight over those rules is still raging, according to documents filed during the recently ended public comment period.

At issue is the Program Integrity and Improvement plan, which would prohibit colleges and universities 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: Tier 1 arrangements, which are agreements to process federal aid on behalf of the school and offer accounts to students and parents; and Tier 2 arrangements, which involve agreements to market accounts directly to students and parents.

The proposed rules also prohibit charging overdraft fees if students select accounts offered by contractors that help schools disburse federal student aid. Card issuers would have to implement authorization limits instead. "Reasonable access" to surcharge-free ATMs and fee-free access to financial aid funds for a 30-day period would also be required, meaning financial institutions might have to deploy more ATMs or pay ATM network providers to comply.

Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.

Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Breaking credit union news and analysis, on-site and via our newsletters and custom alerts
  • Weekly Shared Accounts podcast featuring exclusive interviews with industry leaders
  • Educational webcasts, white papers, and ebooks from industry thought leaders
  • Critical coverage of the commercial real estate and financial advisory markets on our other ALM sites, GlobeSt.com and ThinkAdvisor.com
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.