Joint Trades Letter re Department of Education Regulatory Review

September 20, 2017


Secretary of Education Betsy DeVos

U.S. Department of Education

C/O Ms. Hilary Malawer

400 Maryland Avenue, SW., Room 6E231

Washington, DC 20202


RE:  Regulatory Review - Docket ID: ED-2017-OS-0074, Docket Number 2017-13157


Dear Secretary DeVos:


The Consumer Bankers Association [1] and the American Bankers Association[2] (“the Associations) appreciate the opportunity to submit comments in response to the Department of Education’s (Department) regulatory review in accordance with Executive Order 13777, “Enforcing the Regulatory Reform Agenda (“Order”). [3]  In accordance with the Order, the Department’s Regulatory Reform Task Force (“Task Force”) shall evaluate existing regulations and make recommendations to the Secretary regarding their repeal, replacement, or modification, consistent with applicable law.  Primarily, the Department’s Task Force shall attempt to identify regulations that are outdated, unnecessary, or ineffective; and/or impose costs that exceed benefits. This letter addresses our concerns with the Department’s Program Integrity and Improvement Final Rule (“Rule”), otherwise known as the Cash Management Rule,[4]


The Associations share the Department’s goal in promoting students’ understanding and management of financial products while ensuring that they have meaningful choices.  However, we have serious concerns about, and objections to, the expansiveness of the Rule related to disbursement of federal student aid credit balances (“student aid” or “Title IV funds”) and the agreements between colleges and universities (“schools”), particularly with regard to non-disbursement accounts (i.e., accounts opened outside of the student aid credit balance disbursement process), as well as with regard to sponsored disbursement accounts.   


A primary concern is the Department’s attempt to promulgate regulations that exceed its authority.  The Department’s Rule directs schools to impose significant requirements and restrictions on bank accounts belonging to students and parents into which title IV funds may be deposited.  For the reasons discussed below, we urge the Department to revisit the Rule as it applies to non-disbursement accounts, or Tier 2 accounts (“T2”). [5] These products are offered by federally and state regulated and supervised depositories, have no connection to Title IV funding, and fall outside any authority of the Department.     

With regard to accounts established primarily to receive Title IV refunds directly from a school, Tier 1 accounts (“T1”),[6] there are two specific provisions in the Rule which are unnecessary and ineffective and will impose costs that will exceed any benefit.  These concerns apply equally to T2 accounts in the absence of a repeal of the Rule’s application to those accounts.  Our primary concerns are:


  • Requirements that schools publicly report the number of students who had financial accounts under the school's T1 and T2 arrangements at any time during the most recently completed award year, and the mean and median of the actual costs incurred by those account holders;[7] and


  • A requirement that schools disclose commonly assessed fees with regard to each of the school's T1 and T2 arrangements.[8]


The Associations believe these sections will exacerbate, not resolve, concerns related to student access to Title IV Funds and access to bank products and services by imposing a new and burdensome layer of regulatory complexity and uncertainty that may drive financial institutions to abandon the student bank account market, increasing students’ costs and reducing competition, availability, and student choice.  We urge the Department to reconsider the Rule’s application to T2 accounts and for it to rescind the aforementioned sections of the Rule due to their direct conflict with the principles of the Order.   



[1]  The Consumer Bankers Association is the only national financial trade group focused exclusively on retail banking and personal financial services—banking services geared toward consumers and small businesses. As the recognized voice on retail banking issues, CBA provides leadership, education, research, and federal representation for its members. CBA members include the nation’s largest bank holding companies as well as regional and super-community banks that collectively hold two-thirds of the total assets of depository institutions. 


[2] The American Bankers Association is the voice of the nation’s $17 trillion banking industry, which is composed of small, regional and large banks that together employ more than 2 million people, safeguard $13 trillion in deposits and extend more than $9 trillion in loans.


[3] Enforcing the Regulatory Reform Agenda, 82 Fed. Reg. 12285 (Feb. 24, 2017).


[4] 34 C.F.R. § 668.

[5] T2 arrangements are 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. 


[6] T1 arrangements are 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.


[7] 34 C.F.R. § 668, § 668.164(e)(2)(vii)(B), and 668.164(f)(4)(iv)(B).


[8] 34 C.F.R. § 668, § 668.164 (d)(4)(i)(B)(2), and 668.164(e)(1)/(f)(1).


Click here to read full comment letter.