II 

113TH CONGRESS 

2D SESSION S. 2385 

To amend the Higher Education Act of 1965 and the Truth in Lending 

Act to provide for disclosure and codes of conduct with respect to 

consumer financial products or services and institutions of higher education. 

IN THE SENATE OF THE UNITED STATES 

MAY 22, 2014 

Mr. HARKIN (for himself, Mr. DURBIN, and Ms. WARREN) introduced the following bill; which was read twice and referred to the Committee on 

Health, Education, Labor, and Pensions 

A BILL 

To amend the Higher Education Act of 1965 and the Truth 

in Lending Act to provide for disclosure and codes of 

conduct with respect to consumer financial products or 

services and institutions of higher education. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Protecting Aid for Stu5 dents Act of 2014’’. 


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1 SEC. 2. DISBURSEMENT OF CREDIT BALANCE. 

2 Part G of title IV of the Higher Education Act of 

3 1965 (20 U.S.C. 1088 et seq.) is amended by adding at 

4 the end the following: 

5 ‘‘SEC. 493E. DISBURSEMENT OF CREDIT BALANCE. 

6 ‘‘(a) CREDIT BALANCE.—In this section, the term 

7 ‘credit balance’ means the amount of program funds under 

8 this title credited to a student’s ledger account at the insti9 tution of higher education that exceed the amount as10 sessed the student by the institution for allowable institu11 tional charges, as defined by the Secretary. 

12 ‘‘(b) ESTABLISHMENT OF SYSTEM FOR DISBURSE13 MENT.—Not later than 3 years after the date of enact14 ment of the Protecting Aid for Students Act of 2014, each 

15 institution of higher education that enrolls a student who 

16 receives a grant or loan under this title shall establish a 

17 system for the disbursement of credit balances in accord18 ance with subsection (c). 

19 ‘‘(c) ELECTRONIC PAYMENT SYSTEM.— 

20 ‘‘(1) IN GENERAL.—Each institution of higher 

21 education described in subsection (b) shall establish 

22 a system for disbursement of credit balances 

23 through electronic payments to a deposit account or 

24 a general use prepaid card with the protections af25 forded under the Electronic Fund Transfer Act (15 

26 U.S.C. 1693 et seq.). 


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1 ‘‘(2) NO PREFERRED FINANCIAL INSTITUTION

2 OR DENIAL OR DELAY.—In carrying out the system 

3 under paragraph (1), an institution of higher edu4 cation shall not— 

5 ‘‘(A) require or encourage a student to se6 lect a particular financial institution to which 

7 an electronic payment under this section shall 

8 be made; or 

9 ‘‘(B) deny or cause a delay in the disburse10 ment of credit balances based on the selection 

11 by a student of a particular financial institu12 tion. 

13 ‘‘(d) DISTRIBUTION OPTIONS.— 

14 ‘‘(1) PILOT PROGRAM.—The Secretary of Edu15 cation, in consultation with the Secretary of the 

16 Treasury and the Director of the Bureau of Con17 sumer Financial Protection, shall conduct a pilot 

18 program on providing students with the option of re19 ceiving credit balances, through the electronic pay20 ment system of the institution of higher education in 

21 accordance with subsection (c), by using the Treas22 ury Direct Express system established under section 

23 3336 of title 31, United States Code, or through any 

24 other low-cost alternative as determined by the Sec25 retary. 


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1 ‘‘(2) IMPLEMENTATION.—If the Secretary of 

2 Education, after conducting the pilot program de3 scribed in paragraph (1), determines that allowing 

4 students with credit balances to use any option de5 scribed in such paragraph is in the best interest of 

6 students, the Secretary shall take such actions as 

7 are necessary to provide any such option to students, 

8 which may include entering into agreements with the 

9 Secretary of Treasury or other entity to implement 

10 this paragraph.’’. 

11 SEC. 3. CODE OF CONDUCT IN AFFILIATED CONSUMER FI12 NANCIAL PRODUCTS OR SERVICES. 

13 Part B of title I of the Higher Education Act of 1965 

14 (20 U.S.C. 1011 et seq.) is amended by adding at the end 

15 the following: 

16 ‘‘SEC. 124. CODE OF CONDUCT IN AFFILIATED CONSUMER 

17 FINANCIAL PRODUCTS OR SERVICES. 

18 ‘‘(a) DEFINITIONS.—In this section: 

19 ‘‘(1) AFFILIATED.— 

20 ‘‘(A) IN GENERAL.—The term ‘affiliated’, 

21 when used with respect to a consumer financial 

22 product or service and an institution of higher 

23 education, means an association between such 

24 institution and product or service resulting 

25 from— 


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1 ‘‘(i) the name, emblem, mascot, or 

2 logo of the institution being used with re3 spect to such product or service; or 

4 ‘‘(ii) some other word, picture, or 

5 symbol readily identified with the institu6 tion in the marketing of the consumer fi7 nancial product or service in any way that 

8 implies that the institution endorses the 

9 consumer financial product or service. 

10 ‘‘(B) RULE OF CONSTRUCTION.—Nothing 

11 in subparagraph (A) shall be construed to deem 

12 an association between an institution of higher 

13 education and a consumer financial product or 

14 service to be affiliated if such association is 

15 solely based on an advertisement by a financial 

16 institution that is delivered to a wide and gen17 eral audience consisting of more than enrolled 

18 students at the institution of higher education. 

19 ‘‘(2) ASSOCIATED INDIVIDUAL.—The term ‘as20 sociated individual’, when used with respect to an in21 stitution of higher education, means an individual 

22 who is— 

23 ‘‘(A) an officer of such institution of high24 er education; 


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1 ‘‘(B) an employee or agent of the institu2 tion of higher education who is involved in the 

3 contracting, approval, analysis, or decision4 making process for an affiliated consumer fi5 nancial product or service; or 

6 ‘‘(C) an employee or agent of the institu7 tion of higher education involved in the mar8 keting or solicitation process pertaining to an 

9 affiliated consumer financial product or service. 

10 ‘‘(3) CONSUMER FINANCIAL PRODUCT OR SERV11 ICE.—The term ‘consumer financial product or serv12 ice’ has the meaning given the term in section 1002 

13 of the Consumer Financial Protection Act of 2010 

14 (12 U.S.C. 5481). 

15 ‘‘(4) FINANCIAL INSTITUTION.—The term ‘fi16 nancial institution’ has the meaning given the term 

17 in section 140B of the Truth in Lending Act. 

18 ‘‘(5) INSTITUTION OF HIGHER EDUCATION.— 

19 The term ‘institution of higher education’ means an 

20 institution of higher education as defined in section 

21 102. 

22 ‘‘(b) CODE OF CONDUCT.—Notwithstanding any 

23 other provision of law, no institution of higher education 

24 that is affiliated with a consumer financial product or 

25 service shall be eligible to receive funds or any other form 


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1 of financial assistance under this Act, unless the institu2 tion— 

3 ‘‘(1) develops a code of conduct with respect to 

4 affiliated consumer financial products or services 

5 with which associated individuals shall comply 

6 that— 

7 ‘‘(A) prohibits a conflict of interest with 

8 the responsibility of an associated individual 

9 with respect to such affiliated consumer finan10 cial product or services; 

11 ‘‘(B) requires each associated individual to 

12 act in the best interest of the students enrolled 

13 at the institution of higher education in car14 rying out their duties; and 

15 ‘‘(C) at a minimum, is aligned with the re16 quirements and prohibitions described under 

17 subsections (c) through (g); 

18 ‘‘(2) publishes such code of conduct promi19 nently on the institution’s website; and 

20 ‘‘(3) administers and enforces such code by, at 

21 a minimum, requiring that all of the institution’s as22 sociated individuals be annually informed of the pro23 visions of the code of conduct. 

24 ‘‘(c) BAN ON REVENUE-SHARING ARRANGEMENTS.— 


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1 ‘‘(1) PROHIBITION.—An institution of higher 

2 education that is affiliated with a consumer financial 

3 product or service shall not enter into any revenue4 sharing arrangement with the financial institution. 

5 ‘‘(2) DEFINITION.—In this subsection, the term 

6 ‘revenue-sharing arrangement’— 

7 ‘‘(A) means an arrangement between an 

8 institution of higher education and a financial 

9 institution under which— 

10 ‘‘(i) the financial institution provides 

11 or issues a consumer financial product or 

12 service to students attending the institu13 tion of higher education; 

14 ‘‘(ii) the institution of higher edu15 cation recommends, promotes, sponsors, or 

16 otherwise endorses the financial institution, 

17 or the consumer financial products or serv18 ices offered by the financial institution; 

19 and 

20 ‘‘(iii) the financial institution pays a 

21 fee or provides other material benefits, in22 cluding revenue or profit sharing, to the 

23 institution of higher education in connec24 tion with the consumer financial products 


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1 or services provided to students of the in2 stitution of higher education; and 

3 ‘‘(B) does not include an arrangement 

4 under which a financial institution pays a fair 

5 market price to an institution of higher edu6 cation for the advertising or marketing of the 

7 financial institution to the general public by the 

8 institution of higher education. 

9 ‘‘(d) GIFT BAN.— 

10 ‘‘(1) PROHIBITION.—No associated individual 

11 of an institution of higher education shall solicit or 

12 accept any gift from a financial institution that has 

13 a consumer financial product or service with which 

14 the institution is affiliated. 

15 ‘‘(2) DEFINITION OF GIFT.— 

16 ‘‘(A) IN GENERAL.—In this subsection, the 

17 term ‘gift’ means any gratuity, favor, discount, 

18 entertainment, hospitality, loan, or other item 

19 having a monetary value of more than a de 

20 minimus amount. The term includes a gift of 

21 services, transportation, lodging, or meals, 

22 whether provided in kind, by purchase of a tick23 et, payment in advance, or reimbursement after 

24 the expense has been incurred. 


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1 ‘‘(B) EXCEPTIONS.—The term ‘gift’ shall 

2 not include any of the following: 

3 ‘‘(i) Standard material, activities, or 

4 programs on issues related to a consumer 

5 financial product or service or financial lit6 eracy, such as a brochure, a workshop, or 

7 training. Such material, training, or pro8 gram shall not promote a product or serv9 ice of any specific financial institution. 

10 ‘‘(ii) Food, refreshments, training, or 

11 informational material furnished to an as12 sociated individual as an integral part of a 

13 training session that is designed to im14 prove the service of a financial institution 

15 to the institution of higher education, if 

16 such training contributes to the profes17 sional development of the associated indi18 vidual. 

19 ‘‘(iii) Favorable terms, conditions, and 

20 borrower benefits on a consumer financial 

21 product or service provided to all employ22 ees of the institution of higher education if 

23 such terms, conditions, or benefits are 

24 comparable to those provided to all stu25 dents of the institution. 


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1 ‘‘(iv) Philanthropic contributions to 

2 an institution of higher education from a 

3 financial institution that are unrelated to 

4 the affiliated consumer financial product or 

5 service or the financial institution in gen6 eral or any contribution from the financial 

7 institution that is not made in exchange 

8 for any advantage related to the financial 

9 institution. 

10 ‘‘(C) RULE FOR GIFTS TO FAMILY MEM11 BERS.—For purposes of this subsection, a gift 

12 to a family member of an associated individual 

13 of an institution of higher education shall be 

14 considered a gift to the associated individual 

15 if— 

16 ‘‘(i) the gift is given with the knowl17 edge and acquiescence of the associated in18 dividual; and 

19 ‘‘(ii) the associated individual has rea20 son to believe the gift was given because of 

21 the official position of the associated indi22 vidual. 

23 ‘‘(e) CONTRACTING ARRANGEMENTS PROHIBITED.— 

24 ‘‘(1) PROHIBITION.—No associated individual 

25 of an institution of higher education shall accept 


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1 from a financial institution that has a consumer fi2 nancial product or service with which the institution 

3 is affiliated a fee, payment, or other financial benefit 

4 (including the opportunity to purchase stock) as 

5 compensation for any type of consulting arrange6 ment or other contract to provide services to the fi7 nancial institution or on behalf of the financial insti8 tution. 

9 ‘‘(2) RULE OF CONSTRUCTION.—Nothing in 

10 this subsection shall be construed as prohibiting the 

11 conduct of an individual who is not an associated in12 dividual. 

13 ‘‘(f) BAN ON STAFFING ASSISTANCE.—An institution 

14 of higher education shall not request or accept from a fi15 nancial institution with which the institution has an affili16 ated consumer financial product or service any assistance 

17 with call center staffing, financial aid office staffing, or 

18 any other office or department of the institution of higher 

19 education. 

20 ‘‘(g) ADVISORY BOARD COMPENSATION.—Any asso21 ciated individual of an institution of higher education who 

22 serves on an advisory board, commission, or group estab23 lished by a financial institution that has a consumer finan24 cial product or service with which the institution is affili25 ated shall be prohibited from receiving anything of value 


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1 from the financial institution, except that the individual 

2 may be reimbursed for reasonable expenses incurred in 

3 serving on such advisory board, commission, or group.’’. 

4 SEC. 4. REVENUE SHARING AND DISCLOSURE OF AFFILI5 ATION. 

6 Chapter 2 of title I of the Truth in Lending Act (15 

7 U.S.C. 1631 et seq.) is amended by adding at the end 

8 the following: 

9 ‘‘SEC. 140B. PREVENTING UNFAIR AND DECEPTIVE MAR10 KETING OF CONSUMER FINANCIAL PROD11 UCTS AND SERVICES TO STUDENTS OF INSTI12 TUTIONS OF HIGHER EDUCATION. 

13 ‘‘(a) DEFINITIONS.—In this section: 

14 ‘‘(1) AFFILIATE.—The term ‘affiliate’ means 

15 any person that controls, is controlled by, or is 

16 under common control with another person. 

17 ‘‘(2) AFFILIATED.— 

18 ‘‘(A) IN GENERAL.—The term ‘affiliated’, 

19 when used with respect to a consumer financial 

20 product or service and an institution of higher 

21 education, means an association between such 

22 institution and product or service resulting 

23 from— 


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1 ‘‘(i) the name, emblem, mascot, or 

2 logo of the institution being used with re3 spect to such product or service; or 

4 ‘‘(ii) some other word, picture, or 

5 symbol readily identified with the institu6 tion in the marketing of the consumer fi7 nancial product or service in any way that 

8 implies that the institution endorses the 

9 consumer financial product or service. 

10 ‘‘(B) RULE OF CONSTRUCTION.—Nothing 

11 in subparagraph (A) shall be construed to deem 

12 an association between an institution of higher 

13 education and a consumer financial product or 

14 service to be affiliated if such association is 

15 solely based on an advertisement by a financial 

16 institution that is delivered to a wide and gen17 eral audience consisting of more than enrolled 

18 students at the institution of higher education. 

19 ‘‘(3) CONSUMER FINANCIAL PRODUCT OR SERV20 ICE.—The term ‘consumer financial product or serv21 ice’ has the meaning given the term in section 1002 

22 of the Consumer Financial Protection Act of 2010 

23 (12 U.S.C. 5481). 

24 ‘‘(4) FINANCIAL INSTITUTION.—The term ‘fi25 nancial institution’ means— 


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1 ‘‘(A) any person that engages in offering 

2 or providing a consumer financial product or 

3 service; and 

4 ‘‘(B) any affiliate of such person described 

5 in subparagraph (A) if such affiliate acts as a 

6 service provider to such person. 

7 ‘‘(5) INSTITUTION OF HIGHER EDUCATION.— 

8 The term ‘institution of higher education’ has the 

9 meaning given the term in section 102 of the Higher 

10 Education Act of 1965 (20 U.S.C. 1002). 

11 ‘‘(6) PERSON.—The term ‘person’ means an in12 dividual, partnership, company, corporation, associa13 tion (incorporated or unincorporated), trust, estate, 

14 cooperative organization, or other entity. 

15 ‘‘(7) REVENUE-SHARING ARRANGEMENT.—The 

16 term ‘revenue-sharing arrangement’— 

17 ‘‘(A) means an arrangement between an 

18 institution of higher education and a financial 

19 institution under which— 

20 ‘‘(i) a financial institution provides or 

21 issues a consumer financial product or 

22 service to college students attending the in23 stitution of higher education; 

24 ‘‘(ii) the institution of higher edu25 cation recommends, promotes, sponsors, or 


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1 otherwise endorses the financial institution, 

2 or the consumer financial products or serv3 ices offered by the financial institution; 

4 and 

5 ‘‘(iii) the financial institution pays a 

6 fee or provides other material benefits, in7 cluding revenue or profit sharing, to the 

8 institution of higher education, or to an of9 ficer, employee, or agent of the institution 

10 of higher education, in connection with the 

11 consumer financial products and services 

12 provided to college students attending the 

13 institution of higher education; and 

14 ‘‘(B) does not include an arrangement 

15 under which a financial institution pays a fair 

16 market price to an institution of higher edu17 cation for the advertising or marketing of the 

18 financial institution to the general public by the 

19 institution of higher education. 

20 ‘‘(8) SERVICE PROVIDER.—The term ‘service 

21 provider’— 

22 ‘‘(A) means any person that provides a 

23 material service to another person in connection 

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1 son of a consumer financial product or service, 

2 including a person that— 

3 ‘‘(i) participates in designing, oper4 ating, or maintaining the consumer finan5 cial product or service; or 

6 ‘‘(ii) processes transactions relating to 

7 the consumer financial product or service 

8 (other than unknowingly or incidentally 

9 transmitting or processing financial data in 

10 a manner that such data is undifferen11 tiated from other types of data of the same 

12 form as the person transmits or processes); 

13 and 

14 ‘‘(B) does not include a person solely by 

15 virtue of such person offering or providing to 

16 another person— 

17 ‘‘(i) a support service of a type pro18 vided to businesses generally or a similar 

19 ministerial service; or 

20 ‘‘(ii) time or space for an advertise21 ment for a consumer financial product or 

22 service through print, newspaper, or elec23 tronic media. 

24 ‘‘(b) DISCLOSURE OF AFFILIATION.— 

25 ‘‘(1) REPORTS BY FINANCIAL INSTITUTIONS.— 


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1 ‘‘(A) IN GENERAL.—Not later than 180 

2 days after the date of enactment of the Pro3 tecting Aid for Students Act of 2014, and an4 nually thereafter, each financial institution shall 

5 submit a report to the Bureau containing the 

6 terms and conditions of all business, marketing, 

7 and promotional agreements that the financial 

8 institution has with any institution of higher 

9 education, or an alumni organization or founda10 tion that is an affiliate of or related to an insti11 tution of higher education, relating to any con12 sumer financial product or service offered to 

13 college students at institutions of higher edu14 cation. 

15 ‘‘(B) DETAILS OF REPORT.—The informa16 tion required to be reported under subpara17 graph (A) includes— 

18 ‘‘(i) any memorandum of under19 standing between or among the financial 

20 institution and an institution of higher 

21 education, alumni association, or founda22 tion that directly or indirectly relates to 

23 any aspect of an agreement referred to in 

24 subparagraph (A) or controls or directs 


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1 any obligations or distribution of benefits 

2 between or among the entities; and 

3 ‘‘(ii) the number and dollar amount 

4 outstanding of consumer financial products 

5 or services accounts covered by any such 

6 agreement that were originated during the 

7 period covered by the report, and the total 

8 number and dollar amount of consumer fi9 nancial products or services accounts cov10 ered by the agreement that were out11 standing at the end of such period. 

12 ‘‘(C) AGGREGATION BY INSTITUTION.— 

13 The information required to be reported under 

14 subparagraph (A) shall be aggregated with re15 spect to each institution of higher education or 

16 alumni organization or foundation that is an af17 filiate of or related to the institution of higher 

18 education. 

19 ‘‘(2) REPORTS BY BUREAU.—The Bureau shall 

20 submit to Congress, and make available to the pub21 lic, an annual report that lists the information sub22 mitted to the Bureau under paragraph (1). 

23 ‘‘(3) ELECTRONIC DISCLOSURES.— 

24 ‘‘(A) POSTING AGREEMENTS.—Each finan25 cial institution shall establish and maintain an 


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1 Internet site on which the financial institution 

2 shall post the written agreement between the fi3 nancial institution and the institution of higher 

4 education for each affiliated consumer financial 

5 product or service. 

6 ‘‘(B) FINANCIAL INSTITUTION TO PROVIDE

7 CONTRACTS TO THE BUREAU.—Each financial 

8 institution shall provide to the Bureau, in elec9 tronic format, the written agreements that it 

10 publishes on its Internet site pursuant to this 

11 paragraph. 

12 ‘‘(C) RECORD REPOSITORY.—The Bureau 

13 shall establish and maintain on its publicly 

14 available Internet site a central repository of 

15 the agreements received from financial institu16 tions pursuant to this paragraph, and such 

17 agreements shall be easily accessible and re18 trievable by the public. 

19 ‘‘(D) EXCEPTION.—This paragraph shall 

20 not apply to individually negotiated changes to 

21 contractual terms, such as individually modified 

22 workouts or renegotiations of amounts owed by 

23 an institution of higher education. 

24 ‘‘(c) PROHIBITION OF REVENUE-SHARING ARRANGE25 MENT.—A financial institution that offers a consumer fiVerDate Mar 15 2010 01:43 May 31, 2014 Jkt 039200 PO 00000 Frm 00020 Fmt 6652 Sfmt 6201 E:\BILLS\S2385.IS S2385

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1 nancial product or service that is affiliated with an institu2 tion of higher education may not enter into a revenue3 sharing arrangement with the institution of higher edu4 cation. 

5 ‘‘(d) RULE OF CONSTRUCTION.—Nothing in this sec6 tion shall be construed to prohibit a financial institution 

7 from establishing a consumer product or service affiliated 

8 with an institution of higher education if — 

9 ‘‘(1) the consumer product or service will— 

10 ‘‘(A) assist college students in reducing 

11 costs or fees associated with the use of con12 sumer financial products or services; 

13 ‘‘(B) increase consumer choice; and 

14 ‘‘(C) enhance consumer protections; and 

15 ‘‘(2) the financial institution is in compliance 

16 with the requirements of this Act.’’. 

Æ 


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