As Department of Education (ED) officials draft new rules on cash management and the release of Title IV credit balances, members of Congress are alerting them of possible unintended consequences for higher education institutions and the students they serve.
In the past week, both Republican and Democrat members of the U.S. House of Representatives and U.S. Senate have penned letters to ED, applauding its scrutiny of financial products’ safety while cautioning against overreaching rules that could negatively affect colleges and students.
“[W]e have heard concerns from colleges and financial institutions in Minnesota that draft language considered during the negotiated rulemaking contained a broad definition of ‘sponsored account’ that could interfere with arrangements between colleges and financial institutions to offer financial services to students,” Sens. Amy Klobuchar and Al Franken (both D-MN) write in one letter.
In another, 42 members, including Rep. Blaine Luetkemeyer (R-MO), Sen. John Hoeven (R-ND), and Rep. Michele Bachmann (R-MN) call into question ED’s draft definition of a sponsored account as any “arrangement… under which a student opens, or is referred to open, a financial account… into which Title IV, HEA program funds may be deposited,” which they say could lead to regulation if even an informal arrangement between a financial institution and a school exists.
“We are concerned that an overly broad rule could inadvertently harm the availability and price of financial services to students” the members write. “Such a rule has the potential to place increased financial burdens on colleges and universities, creating pressure on operating and tuition costs.”
In all, ED has received or will receive at least five letters, POLITICO Pro reports.
Though the negotiated rulemaking sessions ended without consensus, Klobuchar and Franken in their letter urge ED to continue to solicit participation from representatives in the higher education sector, among other actors.
“As the Department drafts a proposed rule on the disbursement of Title IV HEA funds, we encourage you to continue working with colleges, financial institutions, and other stakeholders to develop sensible regulations that enable students to have access to secure and convenient financial services on campus,” they conclude.
Publication Date: 7/25/2014