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U.S. PIRG Regulatory Reform Statement on Campus Debit Cards and Open Licensing

Secretary Betsy DeVos
U.S. Department of Education
c/o Wendy Macias
400 Maryland Ave. SW, Room 6C111,
Washington, DC 20202 

October 4, 2017

RE:   Docket ID# ED-2017-OS-0074, Docket# 2017-13157

Dear Secretary DeVos:

The U.S. Public Interest Research Group is a consumer advocacy organization with chapters on 50 college campuses across the country; on behalf of these college students we seek to make college more affordable.   With that mission in mind, we appreciate the opportunity, through the Department’s Regulatory Reform Task Force, to make the case for a strong rule that lowers the cost of bank accounts and debit card products that are marketed to students on campus.  In addition, we have a comment about the open licensing rule recently promulgated by the Department.

In 2012, the U.S. PIRG Education Fund released a report entitled “The Campus Debit Card Trap:  Are Bank Partnerships Fair to Students?”  in response to an uptick in complaints from our college student members, and from student government representatives across the country, who decried the high fees, unusual fees, lack of ATM access, and push marketing of these products on their campuses.  We found that two in five college students across the country had access to a campus debit/check card, often linked to their student ID card – and that many of these accounts were exclusively loaded with students’ financial aid.   The cards were aggressively marketed to students through financial aid disbursement and student identification channels, which are both essential to navigate student life.  While colleges gained revenue and reduced costs by outsourcing services to banks and financial firms, these card deals pushed costs directly on to needy students.   Students were being forced to pay fees to access their financial aid, and some of the fees were unusual – they were not found in normal debit/check accounts off campus.   Finally, the accounts also lacked consumer protections in case of fraud or loss.    Meanwhile the Federal Trade Commission launched an investigation into the high fees students encountered in these products, and aggrieved students launched a class action lawsuit.

In 2014, the U.S. Government Accounting Office issued its own report entitled “COLLEGE DEBIT CARDS: Actions Needed to Address ATM Access, Student Choice, and Transparency” that found problems with these banking arrangements in the following areas:  fees, ATM access, and the lack of neutrality in the marketing of these accounts on campus.

Against this ample documentation of the problem, and with its broad authority to maintain the integrity of the federal financial aid disbursement process, the U.S. Department of Education underwent an extensive negotiated rulemaking process to review the issues arising in the campus banking marketplace.    The final rule which went into effect in July 2016 made campus banking fairer for student consumers and for responsible providers. 

We stand ready to defend the need for the prohibition on fees and the strong account disclosures required by the rule, and ready to enlist the thousands upon thousands of students who have pushed back against the proliferation of these accounts on their campuses in the effort to ensure that the markets stay fair and responsible for students.

Finally, we support the Department of Education's recently implemented rule on the open licensing of materials created from U.S. Department of Education grants. This rule gives the public, including students, the access they deserve to materials created with their own tax dollars, expands access to educational materials, and may lower student courseware costs, which not only benefits students but also the public at large.  

The broader availability of these resources also empowers schools and institutions to make use of these resources, allows businesses to incorporate them into workforce training, helps entrepreneurs to build new enterprises around them, and permits students to enrich themselves through lifelong learning.  

For further information about campus banking, open education materials, and student consumer issues more broadly, please reach out to Christine Lindstrom, Higher Education Program Director at the U.S. Public Interest Research Group, at 617-308-1063;  chris.lindstrom@pirg.org.