Joint letter to DOE; Analysis of Legal Basis for DOE Proposal to Regulate Campus Bank Accounts

By electronic delivery

Ms. Lynn Mahaffie

Acting Assistant Secretary for Postsecondary Education

Department of Education


Dear Ms. Mahaffie,

Earlier this year,  the Department of Education considered in its negotiated rulemaking process proposals related to ways educational institutions manage Title IV, Higher Education Act program funds. The American Bankers Association (ABA) and the Consumer Bankers Association (CBA) support meaningful choice in student aid balance disbursements and bank products. We believe, however, the provisions of the proposals considered in the negotiated rulemaking that sought to regulate bank products clearly exceed the Department’s authority. 

For consideration in any future rulemaking actions, we respectfully submit a legal memorandum regarding the scope of the proposals. As it explains, the Department lacks the authority to implement rules to regulate bank products, an area in which Congress has explicitly vested regulatory authority in other agencies that have the expertise and experience.

ABA and CBA continue to be committed to working with the Department in promulgating appropriate rules to ensure that students have clear choice in how they receive student aid balances and that they understand those choices. Please contact the undersigned directly if you have questions or wish to discuss the issue further. 


Citing its authority over federal student aid programs, the Department of Education is proposing rules that would regulate bank accounts offered to college students. Based on the plain text of the relevant statutory provision, however, the Department does not have authority to implement such regulations. This conclusion is further supported by the legislative history related to the provision and the comprehensive regulatory scheme already in place.

I. Introduction The Department of Education (the “Department”) has attempted a negotiated rulemaking that would have directed institutions of higher learning (“educational institutions”) to impose significant requirements and restrictions on bank accounts belonging to students and parents into which federal student aid credit balances (“student aid” or “Title IV funds”) may be deposited. The Department is expected to issue a proposed rule on this subject in the near future. Covington & Burling LLP has prepared this memorandum analyzing whether or not the Department has the legal authority to require educational institutions to impose such requirements and restrictions on bank accounts. 

To read the full Comment Letter, please download the PDF.