STATEMENT: CAP Welcomes New Rules to Protect Students from Predatory Banking Products
Washington, D.C. — Today, the U.S. Department of Education finalized a rule to increase transparency and limit fees on financial products used to access federal student loans and grants. Rohit Chopra, Senior Fellow at the Center for American Progress, released the following statement:
Too many schools are in cahoots with banks to steer students into products with frivolous fees. Today’s rule-making will arm students with more choices to prevent their bank accounts from being drained.
Joe Valenti, Director of Consumer Finance at CAP, added:
Because campus banking products are often the first connection young people have with the financial system, it is especially crucial that they have timely, safe, and affordable access to their money without worrying about “gotcha” fees. The ongoing RushCard fiasco is proof that we can and should do more to close loopholes and beef up protections for students and other consumers with prepaid cards. And as financial regulators have shown time and time again, the possibility of overdraft has no place in starter accounts like these.
Elizabeth Baylor, Director of Postsecondary Education at CAP, also said:
Today’s rule can put an end to the backroom deals that chip away at scarce student funds. To make this a reality, the Education Department must resist calls for rollbacks and strictly enforce this important protection.
Related resource: Cash Management Rule Maximizes Student Access to Financial Aid Dollars by Joe Valenti and Elizabeth Baylor
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