WASHINGTON—While CUNA supports the U.S. Department of Education’s proposed rulemaking regarding DOE program integrity and improvement, the trade association is concerned the proposal may have some negative effects on credit unions.
In a comment letter signed by Luke Martone, senior director of advocacy and counsel, CUNA stated that the common theme throughout the proposed rulemaking of adequate disclosure and informed choice by consumers is fully supported by the trade association.
However, Martone wrote, “We believe the broad scope of the proposal may result in negative unintended consequences.”
CUNA offered several suggestions it said will improve the proposed rule for those credit unions likely to be affected by it, including:
Regarding the agency targeting “problem areas,” Martone wrote: “Credit unions have a strong tradition of protecting consumer interests, including in the areas of student loans and disbursement of student loan refunds. While we recognize there are some bad actors within all sectors of the financial marketplace, we urge ED to recognize that credit unions generally are not among them in the areas addressed by this rulemaking.
“Therefore, we believe it is critical that ED employ a more targeted approach than the proposal would provide. ED’s attention should focus on the handful of companies that have been the source of the majority of anti-consumer behavior.”
Martone said that while CUNA appreciates that ED has clarified in the proposal that institutions with “general marketing” (i.e., not direct marketing described under proposed § 668.164(f)(3)) agreements with financial institutions would not be covered by the rule, the trade association is concerned that under the proposal, “institutions with ‘direct marketing’ agreements that do not currently market products within the Title IV process would be required to begin marketing the accounts within the Title IV process. This appears to be an attempt by ED to regulate all relationships since they would all be offered in the Title IV process; ED would be able to regulate all the relationships because they would all involve Title IV funds. We ask ED to revisit its proposal to clarify that most provisions of the rule would not apply in instances where there is a ‘direct marketing’ agreement, unless the marketing agreement between the institution and the financial institution provides for the marketing of the card within the Title IV process.”
CUNA also stated that, “As with all major changes affecting their operations, credit unions that participate in programs affected by this proposal will need substantial time to implement the necessary changes and provide appropriate staff training. For these reasons, if ED moves forward with this proposed rulemaking, we request an extensive implementation period of at least one year between publication of the final rule and mandatory compliance.”