CFPB Releases Student Scorecard, Calls Colleges on the Carpet (Dec. 17, 2015)
The CFPB yesterday released its “Safe Student Account Toolkit,” which includes a scorecard to help colleges pick the best school-sponsored deposit or prepaid accounts for their students. In addition, the toolkit includes questions colleges can use “to solicit information from prospective vendors as part of a request for proposals or similar process.” The CFPB also announced it has sent warning letters to 17 colleges for their lack of transparency in deals made with credit card companies.
“Colleges can choose to use the Safe Student Account Toolkit to evaluate costs and benefits for students, including accessing upfront information about fees, features and sales tactics before agreeing to a sponsorship,” according to a CFPB release.
Regarding the scorecard, the CFPB makes several references to the Department of Education’s (DOE) requirements, finalized in October, for schools doing business with third parties to distribute federal student aid. The rules address marketing and transparency requirements, among other guidelines. The bureau makes clear its toolkit includes several of the DOE’s requirements for colleges to identify “safer and more affordable” financial products for their students. The CFPB is quick to point out its scorecard is a series of suggestions for schools and doesn’t supersede DOE regulations, and colleges participating in federal student aid programs should refer to the DOE’s rules. Because the DOE released its rules on Title IV funds disbursement before the Nov. 1 deadline, the regulations will go into effect July 1, 2016, and apply to the 2016-2017 school year.
“The NBPCA agrees with the statement [the CFPB] made in their scorecard that the U.S. Department of Education’s final rules and regulations govern in this area,” Brian Tate, NBPCA vice president, government relations, tells Paybefore. “Members of the financial services industry are working diligently to comply with the rules set out by the [DOE].”
In related CFPB news, the CFPB said it has sent warning letters to 17 schools that might not have adequately disclosed their credit card agreements with financial institutions and may be in violation of federal law, including the CARD Act.