The U.S. Department of Education announced new regulations on October 27, 2015, banning overdraft and transaction swipe fees on student debit and prepaid card accounts. The regulations are effective July 1, 2016. The rules also prohibit schools from requiring students to open an account with a specific institution in order to receive student aid funds. The regulations deal with how banks and credit unions work with colleges and universities to provide the affected financial products to students.
According to the DOE, the regulations were part of the Obama Administration’s goal to protect students in the rapidly expanding college debit and prepaid card marketplace. The regulations also add a new income-based repayment plan so more borrowers can limit the amount of their payments to 10% of their income. The federal agency also said the rules address troubling trends in the proliferation of campus debit and prepaid cards offered to students in exchange for monetary benefits to colleges and universities. The new regulations may be found at this link: MS Word (Informal version of the final regulations (220 pages).