AG Healey Supports Obama Administration’s Efforts to Protect Students from Excessive Fees
Letter Supports U.S. Department of Education’s Efforts to Strengthen Regulations Governing Schools’ Use of Financial Account Providers for Students Receiving Federal Aid
BOSTON – As part of her continued advocacy in support of the interest of students, Attorney General Maura Healey submitted a letter to the U.S. Department of Education supporting proposed regulations meant to ensure that students are not pushed into financial accounts to pay for school costs that include unfavorable terms and excessive fees.
“I applaud the Department of Education for helping put student needs first and ensure that these banking products offer fewer fees and greater value,” AG Healey said. “This federal aid is for students – not schools – and the proposed changes to these regulations help emphasize the importance of maintaining these essential financial safeguards. This fits directly into our office’s priority in protecting the assets of young people trying to improve their economic lives through education.”
In May 2015, the Department of Education proposed a set of rules to strengthen protections for students who receive federal student aid, which includes credit balances – or money back as a result of overpayments to the school or disbursements of federal aid – that can help cover costs beyond tuition such as food, housing and necessary transportation. Student accounts, such as debit cards or prepaid accounts offered by third party servicers and banks that contract with academic institutions, are one way that students receive these credit balances.
The AG’s Office explains that schools should not put their budgetary needs over the needs of their more vulnerable students who receive this aid, noting troubling practices by third-party servicers such as misleading marketing and excessive fees.
In the letter, AG Healey emphasized the importance of prohibiting certain egregious fees – some of which are unheard of in the competitive banking marketplace – for example, transaction fees that charge students every time they use their debit card and PIN to buy something, even a pack of gum at a convenience store.
The AG also urged the Department of Education to ban charges on overdraft withdrawals across all student accounts offered under school agreements as technology should be able to prevent students from withdrawing money below a certain balance.
AG Healey outlined her support for a transparent process for students that may select debit or prepaid accounts including an objective presentation of options for receiving credit balances, and the full disclosure of a school’s contract with third-party student account providers.
The letter offers further support and suggestions for fine tuning the regulations, which includes providing convenient access to ATMs on campus in response to the needs of student account holders on a case-by-case basis, and providing further transparency behind the provision that gives students the option of whether or not to include the cost of books and supplies into their tuition and fees.
The letter is part of AG Healey’s broad efforts to protect economic security for students and young people and complements extensive work by her office investigating the for-profit education industry. For more information, click here.