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Comments - Dept of Education RFI - Regarding Disclosures for Student Financial Accounts
U.S. Department of Education
400 Maryland Avenue SW
Washington, DC 20202
Re: Request for Information Regarding Disclosures for Student Financial Accounts
Docket ID: ED-2015-OPE-0020, 82 Federal Register 21529 (May 9, 2017)
Dear Ms. Higgins,
The American Bankers Association (“ABA”) and the Consumer Bankers Association (“CBA”) (collectively “the Associations”) submit this letter in response to the Department of Education’s (“Department”) Request for Information (“RFI”) regarding disclosures for student financial accounts. The Associations appreciate the opportunity to share our comments and to work with the Department on this issue.
Pursuant to the RFI, the Secretary of Education (Secretary) seeks information from the public “regarding the major features and types of commonly assessed fees that postsecondary institutions (schools) must disclose under 34 CFR 668.164 (d)(4)(i)(B)(2) of the cash management regulations (“Rule”) with regard to each of the school's Tier 1 (“T1”) or Tier 2
(“T2”) arrangements as defined under § 668.164(e)(1) and (f)(1), respectively.” The Secretary also requests feedback regarding the proposed format of these disclosures. The Secretary intends to use this information to develop a notice to be published in the Federal Register describing the format, content, and updated requirements that schools may follow to satisfy the requirements of the Rule with respect to the major features and assessed fees associated with the T1 and T2 arrangements.
The Associations strongly support transparency to ensure students make informed choices about their financial accounts, and will continue to work with the Department to achieve that goal. However, the proposed model disclosure for accounts not subject to the prepaid account disclosure requirements of Regulation E (which implements the Electronic Fund Transfer Act) are inappropriate for checking accounts such as T2 accounts and will not assist students in comparing or selecting checking accounts. Rather, they will distract and potentially confuse or mislead students. The model disclosure highlights a minimal set of terms, some of which are inapplicable to campus checking accounts. We believe that this approach will fail to achieve the stated objectives of the Department to enable students to evaluate the variety of deposit products and services that insured depository institutions offer. Moreover, they will add costs that ultimately will be reflected in the price students pay. Irrespective of the model disclosure’s lack of utility, we believe schools will be inclined to use it in order to receive a safe harbor, which will hinder rather than help the cause of informed transparency and improved consumer decision making.
As discussed in detail below, the Associations believe the goal of providing greater transparency for students can be better achieved with simplified checking account disclosures banks already use. These existing disclosures promote students comprehension and comparison of checking account terms in an easy-to-understand table format that can be used not only to compare campus products, but all checking products. Accordingly, the Associations urge the Department to allow the use of currently-used simple and clear disclosures to comply with the Rule, which will provide students the information needed to make sound financial decisions.
 T1 arrangements would be those where a third-party servicer performs one or more of the functions associated with processing direct payments of Title IV funds on behalf of the school and also offers one or more financial accounts to students and parents. T2 arrangements would be those whereby a school contracts with a financial institution (or entity that offers financial accounts through a financial institution) under which financial accounts are offered and marketed directly to students or their parents.