One lingering concern is that credit unions that already do business on or near campuses may unwittingly fall under the Tier 2 regulations.

Kundert noted most credit unions aren't involved with moving financial aid dollars between schools and students, but many do have contractor relationships with colleges and universities, such as leasing space for branches, placing ATMs on or near campus, providing treasury-management services or providing cashiering functions.

That's a problem, NAFCU Regulatory Affairs Counsel Kavitha Subramanian noted in a July 2 comment letter, because the proposal's wording implies a Tier 2 arrangement exists when a school has any contract with a credit union that offers and markets accounts directly to students or their parents – and that's too broad, she argued.

"Many credit unions have contracts with a university as a landlord-tenant relationship in order to maintain a branch on campus to better serve students," her letter read. "These contractual agreements do not imply that the university has a preference or will pressure students into opening an account with a certain financial institution."

Under the proposed regulations, schools also have to give students a list of financial institutions and account options for receiving their financial aid funds, and those options must be "presented in a neutral manner." Subramanian said NAFCU is worried that simply being on those lists could also have unintended consequences, because the Department of Education might construe that as a school helping students and parents open accounts.

"Under the current rules, if a school assists the student or parent in opening a credit union or bank account, the school must ensure that there is no cost associated with opening the account or with receiving any type of debit card, stored-value card, or other type of ATM card," the letter noted. "Such an over-broad interpretation would make credit unions wary of having their information included in such pamphlets from the university, even though the credit union could be the most beneficial financial service provider for the student."

Few credit unions have Tier 1 or Tier 2 relationships with schools, Kundert told CU Times, but many, including his, bear the name of a university or its logo. That doesn't necessarily mean the credit union has a steering agreement with a school, as NAFCU, CUNA and the Missouri Credit Union Association pointed out.

"Under the proposal, when there is a Tier 2 agreement with a credit union, a financial account is considered 'directly marketed to students and their parents' when the financial account or access device is co-branded with the institution's name, logo, mascot or other affiliation," Subramanian explained in the letter.

Those agreements are usually totally unrelated to the financial aid process, CUNA Senior Director of Advocacy and Counsel Luke Martone added in a separate letter.

"In an attempt to regulate all financial products offered on a campus, ED's proposal would require any institution that has a 'direct marketing' relationship with a financial institution to establish a selection process," he cautioned.

Don Cohenour, president of the Missouri Credit Union Association, agreed and in his own comment letter asked the department to reconsider the language.

Kundert felt the proposed rules address those worries, however.

"If your credit union puts up a sponsor's stadium or has advertising at the stadium, this doesn't cover those relationships at all," he said. "There was some concern in the outset from me and others that it looked like the department was intending to in some way regulate those kinds of basic relationships. The rule makes it clear that general marketing that doesn't specify a financial account or how you open it, and the leasing of space for branches and ATMs, those things are not covered by the rule. That's good news for most credit unions that have university relationships, because that's mostly what they represent."

There are also concerns about some technical aspects of the proposed rules, including that if a credit union has a Tier 1 or Tier 2 account with a school, the school must get consent from the student or parent to open an account before sharing data about the student and before a card goes out.

"The proposed rule does not seem to provide for the common practice in which a student directly opens a T2 financial account with a financial institution through traditional means, and then that student directly requests that the financial institution link their student ID to this financial account," Kundert pointed out in a letter to the department. "We believe the financial institution, in addition to the [educational] institution, should be permitted to obtain the consent prior to the linking of the financial account."

Nonetheless, he said, many third-party service providers often get student information too soon. "What the proposed rule attempts to do is to not permit the schools to do a wholesale sharing of data until the students indicate an interest in banking with the provider," he said.

There is also the issue of how to tell financial institutions that someone is or is no longer a student without violating laws such as the Family Educational Rights and Privacy Act. Financial institutions need basic contact information for students, Kundert explained, but they also need at least one unique, nonduplicative data element in order to differentiate between students with similar names or incomplete contact information. That issue is still unresolved, Kundert said.

Not everybody finds the proposed rules vexing, however. U.S. PIRG, the Center for Responsible Lending and the National Consumer Law Center wrote letters generally supporting them. Kundert, who said he's had no official involvement in the process since the negotiated rulemaking committee adjourned in May 2014, thinks the department could issue a final rule by the end of October and make it effective for July 1, 2016.

He seemed optimistic, however.

"I think when I look at the outcome of the rule, for the most part it's going to be good for the marketplace and good for credit unions," he said. "There's a real problem in the marketplace that this is addressing, and this didn't come out of nowhere."