Newspaper article THE JOURNAL RECORD

Rule Changes Proposed for Bank Relationships with Students

Newspaper article THE JOURNAL RECORD

Rule Changes Proposed for Bank Relationships with Students

Article excerpt

OKLAHOMA CITY - Bankers are closely watching a recent proposal by the U.S. Department of Education to change the rules regarding financial products used by college students.

The American Bankers Association issued a statement regarding a hearing by the Senate Committee on Banking, Housing and Urban Affairs that warned of damages incurred by those who are often lacking banking services and credit.

"Make no mistake: It is students who will bear the brunt of the Department of Education's rulemaking," ABA officials said. "Students who come from families that do not have a bank account or any banking relationship will struggle with how to go about even opening an account. Without these options, many students will be compelled to turn to loosely regulated, less secure, less convenient and more costly options."

Jill Castilla, chief executive of Citizens Bank in Edmond and Oklahoma Bankers Association board member, said banks have reason to be leery of unintended consequences.

"Unintended consequences have been associated with so many regulations that started out as great intentions to protect the consumer and students, and then it ends up having a detrimental effect on a much wider scale," Castilla said.

The Education Department has been working on changes concerning Title IV cash management rules including those related to disbursement methods of funds to students. The Consumer Financial Protection Bureau has been an active participant in crafting the language, calling on financial institutions to publicly disclose campus marketing agreements with higher education in the name of transparency and consumer rights. The industry is concerned about how the restrictions will affect their student products, even if not directly related to financial aid.

The Senate committee guest list this week included representatives from the Center for American Progress, U. …

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