FILE - In this Nov. 2, 2009 file photo, a customer swipes a MasterCard debit card through a machine while checking-out at a shop in Seattle. Bankers and merchants, pillars of the business world and frequent allies, are engaged Thursday, March 10, 2011,in a bitter lobbying war over something Americans do 38 billion times a year _ swipe a debit card.(AP Photo/Elaine Thompson, file)AP
Attention, parents: Your child's college student ID might be doubling as a prepaid card.
The prepaid aspect is the latest twist on a long tradition of college campus ID cards serving a dual financial purpose.
Student IDs have been doubling as payment cards on college campuses for decades, says Taran Lent, co-founder and vice president of product management and development at CardSmith, a campus card service provider.
In the late 1980s and early 1990s, many college student IDs worked as closed-loop cards, allowing students to pay for meals, laundry and other services on campus, as well as purchases at select merchants off campus. Through the mid-to-late 1990s, many banks linked PIN-based debit accounts to student ID cards, according to Lent.
And in the last three years, some universities started distributing financial aid refunds to students via prepaid student IDs.
Several companies have rolled out prepaid student ID cards in 2011. Here's an outline of their features and fees.
New Prepaid Student ID Cards
On April 27, SunTrust launched its SunTrust Campus Card, which is a MasterCard reloadable prepaid card that also serves as a college student ID. With the SunTrust Campus Card, students can make purchases anywhere MasterCard is accepted and withdraw cash fee-free at SunTrust ATMs.
Parents and students can add funds to the card online, and participating colleges and universities will be able to load financial aid disbursements directly onto the cards, if desired.
In November, American Express followed suit with the launch of its first prepaid campus ID card with the University of North Florida.
The Osprey 1Card prepaid campus ID card offered by American Express allows students to make purchases anywhere American Express is accepted, including online retailers. It has two magnetic stripes -- one for campus use and one for American Express transactions.
Once students register their prepaid student ID with American Express, they can add money to the card from a bank account or through a Green Dot MoneyPak, a service that allows customers to add money to a prepaid card or PayPal account without using a bank account. Students using a MoneyPak to load cash onto their prepaid cards pay a purchase fee of up to $4.95.
American Express provides one free ATM withdrawal per calendar month with the card. After that, a $2 fee is assessed for each additional ATM withdrawal.
If a prepaid student ID card is lost or stolen, American Express will replace the card's prepaid balance.
But be aware -- a college or university may charge anywhere from $10 to $25 to replace a student ID, says Lent.
Another card -- the Discover Campus Card -- allows college students to load it with their financial aid balances, work-study funds, student payroll or other funds. Students can make purchases anywhere Discover is accepted, get cash from ATMs and add money to the card from a bank account.
With the Discover Campus Card, students can make free ATM withdrawals at participating on-campus ATMs and at Allpoint Network ATMs. If a student withdraws cash from the card with another network's ATM, a $2.50 card fee applies.
If a Discover Campus card is inactive for nine consecutive months, a $3.50 monthly maintenance fee is applied.
Grading Prepaid Student IDs
The prepaid functionality adds purchasing power to a student's trusty school ID, a card many college students always carry.
"It makes it that much easier for the student," says Madeline K. Aufseeser, a senior analyst with Aite Group, a Boston-based research and advisory firm for the payments industry. "They only have to carry one card along with them."
Students can use their prepaid campus ID cards to pay bills, shop online or withdraw cash at local ATMs. And because the cards are prepaid, students can only spend the amount loaded on the card.
"You can't overdraft," says Terry Maher, general counsel for the Network Branded Prepaid Card Association. "If there's no money on the card, it declines the transaction."
However, it's smart to review any financial components to your college student's ID card. Here are some details to research before signing up.
- Can your student use the card to make purchases on and off campus?
- Can the student ID card be linked to a checking account?
- Can your child receive his or her financial aid refund on the card? How else can the card be funded?
- Are there any fees associated with the card, including fees for loading money, monthly maintenance, inactivity, card replacement or ATM withdrawals?
- Will the funds be replaced if the card gets lost or stolen?
"Take the time to read through the terms and conditions of prepaid cards," Lent says. "Not all prepaid cards are created equal. Some have fees. Others don't."
Before signing up for a student ID that functions as a prepaid card, consider your student's other financial options. Would your child be better off with a student checking account and debit card from a local bank or credit union?
"They don't necessarily have to take the university card. Check and see if the product being offered by the university is competitive," Maher says. "If a student already has a bank account, they might want to use a debit card."