Financial services providers react to DOE’s proposed debit card rule
If it’s finalized as is by Nov. 1, The Department of Education proposed rule on campus debit cards and Title IV payments will have a major impact on third-party service providers.
Some of the regulations in the rule include restrictions on fees and limitations on access to student information. It would also require schools to issue paper checks as an option, even if they’ve already gone paperless.
Along with many other stakeholder groups, Higher One, TouchNet Information Systems and other companies participated in negotiation sessions prior to the release of the proposed rule in May.
While supportive of consumer protections for students, Higher One went in trying to find regulations that worked for everyone, even if it meant change on their part, says company CEO Marc Sheinbaum. He says he was disappointed in the final proposed rule, as he feels it went beyond compromise to areas that weren’t discussed, such as access to student information.
“It’s important for schools to pass along the proper student information to us to authenticate the student’s identity and match that with their financial aid refund amount,” Sheinbaum says. “We don’t want money going to the wrong student.”
Having the paper check option, he adds, is a step backward for schools as it would increase costs and create issues for students without bank accounts. “Some of our clients have very high percentage of students that are unbankable and can’t imagine issuing paper checks to all those students,” Sheinbaum says.
One rule provision requires that a student’s bank account, if he or she has one, be the first and default option for tuition refunds. “For those students that’s a good thing,” says Dan Toughey, senior vice president of TouchNet. “But for the many unbanked students, it just don’t add up in their favor.”
Though no one wants change, companies in the payment space are used to having to adapt to new regulations and rules, Toughey says. “There’s always change on the horizon and we plan on working through it.”