ED Moves Forward With Payment Vehicle Pilot, Selects Institutions and Providers

By Allie Arcese, Sr. Director of Strategic Communications & Engagement

By Allie Bidwell, NASFAA Managing Editor

The Department of Education (ED) this week inched closer to rolling out a pilot program for its payment vehicle, which would function as a prepaid debit card for federal student aid, as it selected a number of universities and financial service companies to serve as providers for the pilot. 

ED confirmed to POLITICO that Purdue University, the University of Georgia, Jackson State University, and the University of California, Riverside will participate in the pilot program, along with three companies: First Data, Urban FT, and Metabank. ED in October 2018 published a solicitation for companies to develop the pilot program, and shared that the payment vehicle would be integrated into Federal Student Aid’s (FSA) myStudentAid mobile app, which also hosts the mobile FAFSA. 

The implementation of the program has been delayed several times, as lawmakers on both sides of the aisle have expressed concerns over student data privacy, whether students would be charged a fee to use the payment vehicle, and the potential for the federal government to set limits on how students use their financial aid dollars. 

FSA Chief Operating Officer Mark Brown wrote to Rep. Susan Davis (D-CA) in June addressing some of those concerns, and said the payment vehicle would provide a “free, secure, and convenient” way for students to access their federal financial aid dollars. Davis wrote to ED in July 2018 asking for more information on FSA’s authority to conduct a pilot program, why ED felt the need to conduct its own program, and what data ED would monitor, among other things. 

The provider would only produce “non-identifying, aggregated” information that FSA would use to “assess the effectiveness” of the program, Brown wrote. That information may include, but not be limited to, aggregated data on mobile app adoption rates, call center activity, complaint management dispute requests, fraud reports, lost and stolen card reports, on-campus and off-campus usage, and school and student satisfaction. 

Brown also wrote that the pilot would restrict the use of data for marketing purposes — specifying that the providers could not market student data without explicit permission from the student. Any data use for marketing purposes could only be authorized through a “by-occurrence” opt-in method from the student, rather than a “general or blanket” opt-in or opt-out method.

According to POLITICO, some of the participating institutions have written to ED to say that while the program “may be offered” to students, the institutions would “neither endorse nor prohibit” students from participating.


Publication Date: 10/23/2019

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