113 S2385 IS: Protecting Aid for Students Act of 2014
U.S. Senate
2014-05-22
text/xml
EN
Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
1.This Act may be cited as the Protecting Aid for Students Act of 2014
.
2.
Disbursement of credit balance
Part G of title IV of the Higher Education Act of 1965 (20 U.S.C. 1088 et seq.) is amended by
adding at the end the following:
493E.
Disbursement of credit balance
(a)
In this section, the term credit balance means the amount of program funds under this title credited to a student’s ledger account at the
institution of higher education that exceed the amount assessed the
student by the institution for allowable institutional charges, as defined
by the Secretary.
(b)
Establishment of system for disbursement
Not later than 3 years after the date of enactment of the Protecting Aid for Students Act of 2014, each institution of higher education that enrolls a student
who receives a grant or loan under this title shall establish a system for
the disbursement of credit balances in accordance with subsection (c).
(c)
Electronic payment system
(1)
Each institution of higher education described in subsection (b) shall establish a system for
disbursement of credit balances through electronic payments to a deposit
account or a general use prepaid card with the protections afforded under
the Electronic Fund Transfer Act (15
U.S.C. 1693 et seq.).
(2)
No preferred financial institution or denial or delay
In carrying out the system under paragraph (1), an institution of higher education shall not—
(A)
require or encourage a student to select a particular financial institution to which an electronic
payment under
this section shall be made; or
(B)
deny or cause a delay
in the disbursement of credit balances based on the selection by a student
of a
particular financial institution.
(d)
(1)
The Secretary of Education, in consultation with the Secretary of the Treasury and the Director of
the Bureau of Consumer Financial Protection, shall conduct a
pilot program on providing students with the option of receiving
credit balances, through the electronic payment system of the institution
of higher education in accordance with subsection (c), by using the
Treasury Direct Express system established under section 3336 of title 31,
United States Code, or through any other low-cost alternative as
determined by the Secretary.
(2)
If the Secretary of Education, after conducting the pilot program described in paragraph (1),
determines
that allowing students with credit balances to use any option described in
such paragraph is in the best interest of students, the Secretary shall
take such actions as are necessary to provide any such option to
students, which may include entering into agreements with the Secretary of
Treasury or other entity to implement this paragraph.
.
3.
Code of conduct in affiliated consumer financial products or services
Part B of title I of the Higher Education Act of 1965 (20 U.S.C. 1011 et seq.) is amended by adding
at the end the following:
124.
Code of conduct in affiliated consumer financial products or services
(a)
In this section:
(1)
(A)
The term affiliated, when used with respect to a consumer financial product or service and an institution of higher
education, means an association between such institution and product or
service resulting from—
(i)
the name, emblem, mascot, or logo of the institution being used with respect to such product or
service; or
(ii)
some other word, picture, or
symbol readily identified with the institution in the
marketing of the consumer financial product or service in any way that
implies
that the institution endorses the consumer financial product or service.
(B)
Nothing in subparagraph (A) shall be construed to deem an association between an
institution of higher education and a consumer financial product or
service to be affiliated if such association is solely based on an
advertisement
by a financial institution that is delivered to a wide and general
audience consisting of more than enrolled students at the institution of
higher education.
(2)
The term associated individual, when used with respect to an institution of higher education, means an individual who is—
(A)
an officer of such institution of higher education;
(B)
an employee or agent of the institution of higher education who is involved in the contracting,
approval,
analysis, or decisionmaking process for an affiliated consumer financial
product or service; or
(C)
an employee or agent of the institution of higher education involved in the
marketing or solicitation process pertaining to an affiliated consumer
financial product or service.
(3)
Consumer financial product or service
The term consumer financial product or service has the meaning given the term in section 1002 of the Consumer Financial Protection Act of 2010
(12 U.S.C. 5481).
(4)
The term financial institution has the meaning given the term in section 140B of the Truth in Lending Act.
(5)
Institution of higher education
The term institution of higher education means an institution of higher education as defined in section 102.
(b)
Notwithstanding any other provision of law, no institution of higher education that is affiliated
with a consumer financial product or service shall be eligible to receive
funds or any other form of financial assistance under this Act, unless the
institution—
(1)
develops a code of conduct with respect to affiliated consumer financial
products or services with which associated individuals shall comply that—
(A)
prohibits a conflict of interest with the responsibility of an associated individual with respect
to such affiliated consumer financial product or services;
(B)
requires each associated individual to act in the best interest of the students enrolled at the
institution of higher education in carrying out their duties; and
(C)
at a minimum, is aligned with the requirements and prohibitions described under subsections (c)
through (g);
(2)
publishes such code of conduct prominently on the institution's website; and
(3)
administers and enforces such code by, at a minimum, requiring that all of the institution's
associated individuals be annually informed of the provisions of the code
of conduct.
(c)
Ban on revenue-Sharing arrangements
(1)
An institution of higher education that is affiliated with a consumer financial product or service
shall not enter into any revenue-sharing arrangement with the financial
institution.
(2)
In this subsection, the term revenue-sharing arrangement—
(A)
means an arrangement between an institution of higher education and a financial institution under
which—
(i)
the financial institution provides or issues a consumer financial product or service to students
attending the institution of higher education;
(ii)
the institution of higher education recommends, promotes, sponsors, or otherwise endorses
the financial institution, or the
consumer financial products or services offered by the financial
institution; and
(iii)
the financial institution pays a fee or provides other material benefits, including revenue or
profit sharing, to the institution of higher education in connection with
the consumer financial products
or services provided to students of the institution of higher education;
and
(B)
does not include an arrangement under which a financial institution pays a fair market price to an
institution of higher education for the advertising or marketing of the
financial institution to the general public by the institution of higher
education.
(d)
(1)
No associated individual of an institution of higher education shall solicit or accept any gift
from a financial institution that has a consumer financial product or
service with which
the institution is affiliated.
(2)
(A)
In this subsection, the term gift means any gratuity, favor, discount, entertainment, hospitality, loan, or other item having a
monetary value of more than a de minimus amount. The term includes a gift
of services, transportation, lodging, or meals, whether provided in kind,
by purchase of a ticket, payment in advance, or reimbursement after the
expense has been incurred.
(B)
The term gift shall not include any of the following:
(i)
Standard material, activities, or programs on issues related to a consumer financial product or
service or financial literacy, such as a brochure, a workshop, or
training. Such material, training, or program shall not promote a product
or service of any specific
financial institution.
(ii)
Food, refreshments, training, or informational material furnished to an associated individual as an
integral part of a training session
that is designed to improve the service of a financial institution to the
institution of higher education, if such training
contributes to the professional development of the associated individual.
(iii)
Favorable terms, conditions, and borrower benefits on a consumer financial product or service
provided to all employees of the institution of higher education if such
terms, conditions, or benefits are
comparable to those provided to all students of the institution.
(iv)
Philanthropic contributions to an institution of higher education from a financial institution that
are unrelated to the affiliated consumer financial product or service or
the financial institution in general or any contribution from the
financial institution that is not made in exchange for any advantage
related to the financial institution.
(C)
Rule for gifts to family members
For purposes of this subsection, a gift to a family member of an associated individual of an
institution of higher education shall be considered a gift to the
associated individual if—
(i)
the gift is given with the knowledge and acquiescence of the associated individual; and
(ii)
the associated individual has reason to believe the gift was given because of the official
position of the associated individual.
(e)
Contracting arrangements prohibited
(1)
No associated individual of an institution of higher education shall accept from a financial
institution that has a consumer financial product or service with which
the
institution is affiliated a fee, payment, or other
financial benefit (including the opportunity to purchase stock) as
compensation for any type of consulting arrangement or other contract to
provide services to the financial institution or on behalf of the
financial institution.
(2)
Nothing in this subsection shall be construed as prohibiting the conduct of an individual who is
not an associated individual.
(f)
Ban on staffing assistance
An institution of higher education shall not request or accept from a financial institution with
which the institution has an affiliated consumer financial product or
service
any assistance with call center staffing, financial aid office staffing,
or any other office or department of the institution of higher education.
(g)
Advisory board compensation
Any associated individual of an institution of higher education who serves on an advisory board,
commission, or group established by a financial institution that has a
consumer financial product or service with which the
institution is affiliated shall be prohibited from receiving anything of
value
from the financial institution, except that the individual may be
reimbursed for reasonable expenses incurred in serving on such advisory
board, commission, or group.
.
4.
Revenue sharing and disclosure of affiliation
Chapter 2 of title I of the Truth in Lending Act (15 U.S.C. 1631 et seq.) is amended by adding at
the end the following:
140B.
Preventing unfair and deceptive marketing of consumer financial products and services to students
of institutions of higher education
(a)
In this section:
(1)
The term affiliate means any person that controls, is controlled by, or is under common control with another person.
(2)
(A)
The term affiliated, when used with respect to a consumer financial product or service and an institution of higher
education, means an association between such institution and product or
service resulting from—
(i)
the name, emblem, mascot, or logo of the institution being used with respect to such product or
service; or
(ii)
some other word, picture, or
symbol readily identified with the institution in the
marketing of the consumer financial product or service in any way that
implies
that the institution endorses the consumer financial product or service.
(B)
Nothing in subparagraph (A) shall be construed to deem an association between an
institution of higher education and a consumer financial product or
service to be affiliated if such association is solely based on an
advertisement
by a financial institution that is delivered to a wide and general
audience consisting of more than enrolled students at the institution of
higher education.
(3)
Consumer financial product or service
The term consumer financial product or service has the meaning given the term in section 1002 of the Consumer Financial Protection Act of 2010
(12 U.S.C. 5481).
(4)
The term financial institution means—
(A)
any person that engages in offering or providing a consumer financial product or service; and
(B)
any affiliate of such person described in subparagraph (A) if such affiliate acts as a service
provider to such person.
(5)
Institution of higher education
The term institution of higher education has the meaning given the term in section 102 of the Higher Education Act of 1965 (20 U.S.C.
1002).
(6)
The term person means an individual, partnership, company, corporation, association (incorporated or
unincorporated), trust, estate, cooperative organization, or other entity.
(7)
Revenue-sharing arrangement
The term revenue-sharing arrangement—
(A)
means an arrangement between an institution of higher education and a financial institution under
which—
(i)
a financial institution provides or issues a consumer financial product or service to college
students
attending the institution of higher education;
(ii)
the institution of higher education recommends, promotes, sponsors, or otherwise endorses
the financial institution, or the
consumer financial products or services offered by the financial
institution; and
(iii)
the financial institution pays a fee or provides other material benefits, including revenue or
profit sharing, to the institution of higher education, or to an officer,
employee, or agent of the institution of higher education, in connection
with the consumer financial products and services provided to college
students attending the institution of higher education; and
(B)
does not include an arrangement under which a financial institution pays a fair market price to an
institution of higher education for the advertising or marketing of the
financial institution to the general public by the institution of higher
education.
(8)
The term service provider—
(A)
means any person that provides a material service to another person in connection with the offering
or provision by such other person of a consumer financial product or
service, including a person that—
(i)
participates in designing, operating, or maintaining the consumer financial product or service; or
(ii)
processes transactions relating to the consumer financial product or service (other than
unknowingly or incidentally transmitting or processing financial data in a
manner that such data is undifferentiated from other types of data of the
same form as the person transmits or processes); and
(B)
does not include a person solely by virtue of such person offering or providing to another person—
(i)
a support service of a type provided to businesses generally or a similar ministerial service; or
(ii)
time or space for an advertisement for a consumer financial product or service through print,
newspaper, or electronic media.
(b)
Disclosure of affiliation
(1)
Reports by financial institutions
(A)
Not later than 180 days after the date of enactment of the Protecting Aid for Students Act of 2014, and annually thereafter, each financial institution shall submit a report to the Bureau
containing the terms and conditions of
all business, marketing, and promotional agreements that the financial
institution has with any institution of
higher education, or an alumni
organization or foundation that is an affiliate of or related to an
institution of
higher education, relating to any consumer financial product or service
offered to college students at institutions of higher education.
(B)
The information required to be reported under subparagraph (A) includes—
(i)
any memorandum of understanding between or among the financial institution and an institution of
higher
education, alumni association, or foundation that directly or indirectly
relates to
any aspect of an agreement referred to in subparagraph (A) or controls
or directs any obligations or distribution of benefits between or among
the entities; and
(ii)
the number and dollar amount outstanding of consumer financial products or services accounts
covered by any such agreement that
were originated during the period
covered by the report, and the total number and dollar amount of consumer
financial products
or services accounts
covered by the agreement that were outstanding at the end of such period.
(C)
Aggregation by institution
The information required to be reported under subparagraph (A) shall be aggregated with respect to
each institution of higher education or alumni organization or foundation
that is an affiliate of or related to the institution of higher education.
(2)
The Bureau shall submit to Congress, and make available to the public, an annual report that
lists the information submitted to the
Bureau under paragraph (1).
(3)
(A)
Each financial institution shall establish and maintain an Internet site
on which the financial institution shall post the written agreement
between the
financial institution and the institution of higher education for each
affiliated consumer
financial product or service.
(B)
Financial institution to provide contracts to the bureau
Each financial institution shall provide to the Bureau, in electronic format, the written
agreements that it
publishes on its Internet site pursuant to this paragraph.
(C)
The Bureau shall establish and maintain on its publicly available Internet site a central
repository of the agreements received from financial institutions pursuant
to this paragraph, and such agreements shall be easily accessible and
retrievable by the public.
(D)
This paragraph shall not apply to individually negotiated changes to contractual terms, such as
individually modified workouts or renegotiations of amounts owed by an
institution of higher education.
(c)
Prohibition of revenue-Sharing arrangement
A financial institution that offers a consumer financial product or service that is affiliated with
an institution of higher education may not enter into a revenue-sharing
arrangement with the
institution of higher education.
(d)
Nothing in this section shall be construed to prohibit a financial institution from establishing
a consumer product or service affiliated with an institution of higher
education if —
(1)
the consumer product or service will—
(A)
assist college students in reducing costs or fees associated with the use of consumer financial
products or services;
(B)
increase consumer choice; and
(C)
enhance consumer protections; and
(2)
the financial institution is in compliance with the requirements of this Act.
.