More than 60 Democratic members of both chambers of Congress are cosponsors of legislation, introduced on Thursday, that aims to protect students from exploitation by the banking industry.
The legislation, known in the Senate as the Protecting Aid for Students Act and in the House as the Curbing Abusive Marketing Practices With University Student Debit Cards Act, arrives just days after a panel of negotiators appointed by the U.S. Education Department failed to reach agreement on new regulations for business arrangements between colleges and banks regarding student accounts and institution-affiliated debit cards.
"Many of today’s college students are being strong-armed into using financial products that are endorsed by their university," Rep. George Miller of California, the lead House sponsor, said in a written statement. "These products often carry unnecessarily high fees that chip away at students' federal grants and loans, which should be helping pay for classes, not lining the pockets of banks. In reality, these ‘preferred’ products aren’t preferable at all."
The House version of the legislation would prevent "revenue-sharing" deals between colleges and banks for college-issued deposit accounts or debit cards, and would require that banks pay colleges at "market rate" to provide and promote their banking services.
The bill also calls for a "code of conduct" for colleges that bans banks from giving payments or gifts to college officials, and from inducing students to use or purchase their financial products on or near college campuses or at college-sponsored events. Colleges would also have to disclose publicly any agreements with banks to market their financial products to students and to submit an annual report to the Consumer Financial Protection Bureau regarding any such agreements.