subject: College Debit Cards: Fees To Watch Out For [print this page] College students will now have easier access to their financial aid through debit cards or pre-paid cards. The colleges are teaming up with banks to lower their costs for distributing financial aid money to college students. In doing so, the college students are wasting their financial aid paying an assortment fees.
There is aggressive marketing being done to promote these college cards. School logos designed on the cards are giving the students a feeling that the card is connected to their college and discourages them from looking for other options. Depending on which bank the college has connected with to support the cost for these cards, the assorted fees will be different.
Some students are experiencing costs for: swiping their card, reloading pre-paid cards, using a personal identification number to process transaction, overdraft fees, a charge if someone else loads money onto the card, inactivity fees, and pay fees for checking the balance on an ATM ( the ATM may charge separate fees for this). These fees as with any debit card come out of the account balance. With college students, the account balance is their financial aid. Money which is geared to college costs is being eaten away by the card fees.
The deals between the colleges and the banks are being done behind closed doors which are raising concern with the Department of Education and the Consumer Financial Protection Bureau. These college students are new to banking and are unaware of other options available. These closed meetings and aggressive marketing practices are banking on this fact.
The United States Public Interest Research Group Education Fund (U.S. PIRG) investigated this matter and has found that college students would benefit from a transparency of these dealings. The U.S.PIRG created a report which surveyed these cards being used at 50 of the largest community colleges and 20 of the largest private universities. The recommendation which is presented in their report is for best practices to protect consumers and offer suggestions for college students. Students will want to shop around before committing to any one financial opportunity.
It would benefit the college student if the parents get involved and help their college student look into all options available to them to resource the financial aid funds. Introduce them to the banking world and explore the hidden costs which can eat away at their money. Heading off to college is overwhelming enough to the students as they begin a new phase of life, start a new school, borrow money for the first time, and for many be away from family for the first time. These fees will eat away at their college aid without their understanding unless they get some help. Find a financial relationship which will provide access to the money the student will require. A banking relationship with the least amount of fees possible to protect the college students' money would be the best solution.
