— Small fees add up for college students using
college-issued debit and prepaid cards, which are
often used to draw financial aid, and congressional
investigators on Thursday urged greater oversight of
types of cards are becoming more common on campuses
and double sometimes as a student ID card. They are
popular with both college administrators and many
students because of the convenience, but using a
third-party financial provider can also save colleges
and universities money as they offer services such as
distributing financial aid or making tuition refunds.
Government Accountability Office said the fees
generally are similar to those other debit cards
charge. But, it said, some students end up with
out-of-network ATM fees, and some cards have terms
that charge a fee if students enter a pin number to
receive money instead of signing to get cash back.
says it's unclear how much money is garnered from
these fees, but Federal Deposit Insurance Corporation
staff members told GAO that it has received complaints
from students of fees ranging from hundreds of dollars
to more than $1,000, the report said.
GAO says contract terms between colleges and financial
institutions should be more transparent. Students are
supposed to have convenient access to aid money, and
GAO asked the Education Department to define what that
means in terms of access to ATMs. It also called on
the department to develop requirements to ensure
students know all their banking options.
response by the department included in the report said
Education Department officials agree with the
recommendations. The department has convened a
rule-making session next week to address the issue.
National Association of College and University
Business Officers has issued "best
practices" guidance to colleges and universities
that encourages them to keep students' interests
first, to negotiate low- or no-fee financial services
and to make agreements transparent.
as colleges and universities strive to provide
high-quality academic experiences for their students,
they must ensure that school-sanctioned services are
also good consumer values," the guidelines say.
Consumer Financial Protection Bureau notes in the
report that in one survey of school officials, 69
percent of schools said they already make available
their arrangement with financial companies that spell
out the terms of the partnership between the school
and the company servicing the debit or prepaid card.
But the bureau said students can have difficulty
finding that information.
2009, Congress passed a law that requires credit card
companies to disclose relationships with colleges and
universities. That law doesn't include college-issued
debit or prepaid cards, according to Consumer
Financial Protection Bureau.
Tom Harkin, D-Iowa, and Rep. George Miller, D-Calif.,
said in a joint statement that it was troubling that
students could see a dent in the amount of student aid
available to them because of debit and prepaid card
curbed aggressive and lucrative marketing on these
products, but financial institutions are now back on
campus," said Miller, the ranking member of the
House committee that oversees education. "They
are pushing debit cards arrangements that are once
again great for banks and great for colleges but can
be terrible for students. "
in a statement, Richard Hunt, the president of the
Consumer Bankers Association, said the report shows
that, "arrangements with banks often benefit
students and schools by offering reduced costs,
convenience of use and valuable financial
education." He said association member banks have
relationships with colleges and universities that
"offer students products with transparent terms
and the freedom to choose the products and services
least 850 schools, or 11 percent of colleges and
universities, had agreements to provide the debit or
prepaid cards as of last July, according to the GAO.
It said these schools tend to be large and represent
about 40 percent of all secondary students.