Although the final rule reflects some changes that respond to ABA’s comments — such as removing parents’ accounts from being subject to the rule and limiting the scope of its definition of institutions that process federal aid funds to exclude treasury management services — the rule retains many of the problematic provisions of the proposed rules. Frank Keating said:
Students benefit from the low-cost and convenient financial products made available through arrangements between educational and financial institutions. The rule imposes a new and burdensome layer of regulatory complexity and uncertainty that may drive financial institutions to abandon the student bank account market, reducing competition, availability and choice for students.
In addition to arguing that the rule counteracts DoE’s stated goal of protecting students, ABA has argued that the department lacks legal authority to become a de facto bank regulator.
Read the final rule.