How your university hands out financial aid could reduce the amount you actually have to spend, new research suggests.

Instead of disbursing aid refunds by check, schools oftentimes do it through special debit cards that double as student identification cards, according to the U.S. Public Interest Research Group Education Fund, or PIRG, a nonprofit consumer advocacy group in Washington, D.C.

The federal government requires that schools disburse financial aid refunds to students free of charge. However, these cards come with fees for other services that can eat up aid. Here's how to get your aid without losing a penny.

How Financial Aid Debit Cards Work

When students receive financial aid, whether it's a scholarship, grant or student loan, schools apply that money to college costs then disburse the rest to the student, says Gene Gillis, bursar at the University of Houston, a school that has used Higher One debit cards to disburse aid refunds for 10 years. Higher One, a company in New Haven, Conn., provides financial services to more than 830 campuses.

Still, some schools disburse by check. That method requires schools to pay for mailing supplies as well as staff to write the checks. Factoring in the physical and personnel costs, it can cost anywhere from $5 to $13 for a school to issue a check individually, Gillis says.

"(Debit cards offer) a tremendous savings for the school," he says. "When the school saves money, it's able to keep from raising tuition and fees."

On top of earning revenue by contracting with schools, companies offering debit cards to disburse money to students also make money by providing other banking services such as overdraft protection and cash advances on prepaid cards.

Jim Angleton, president of Aegis FinServ Corp., a Miami-based firm that produces campus debit cards, says Aegis charges an interchange fee but funnels up to 37.5% of the fee back to the school.

"(Colleges are) definitely making money," Angleton says. "They're all getting hit hard … and the bottom line is they have to make money."

Who Really Pays?

Debit cards for disbursing funds may be good for colleges, but critics argue that cash-strapped students absorb the costs. The PIRG study says that some cards come with fees as high as 50 cents per swipe in transaction fees, $38 per overdraft and $10 for inactivity after six months without use. Students can avoid this last fee by swiping their card as a credit card.

"Students don't really realize what they're signing up for," says Rich Williams, higher education advocate for the PIRG. "They think getting (their aid refund) on a card is sort of like using a Starbucks gift card where they swipe it until it's gone. They don't really realize that these cards can come with significant responsibilities and significant fees if they don't use them in the correct ways."

Students do have choices. Some schools require students to have ID cards with banking and debit card options, but students can choose not to use those features. Higher One and Aegis allow students to receive aid refunds by check or direct deposit to their bank of choice for free.

"Unfortunately all of these options take time except the bank-preferred product, which is the debit card," Williams says. "(Students) can't wait the extra five to 14 days to get their money deposited to their own account or to wait for a paper check, so the only real option available to them is the one that gets it to them now -- and that's the debit card."

University of Houston's Gillis says students oftentimes prefer refunds by debit cards, fees and all, over checks that can be sent to the wrong address or get lost in the mail.

"We had far more issues and complaints when we sent out checks than we ever have with dealing with Higher One (cards)," he says.

Know the Rules

The key to getting the most out of your aid is to understand how it will be disbursed and the costs associated with that method.

"We encourage students to understand the choices that are available to them in how they receive their refund and also in where they choose to bank, and evaluate what their needs are, what kinds of transactions they're going to be conducting and what features are important to them, and what prices come with those features," says Miles Lasater, chairman and president of Higher One.

Regardless of how aid refunds get disbursed, students will still need a place to put their money. Mike Schenk, vice president of the Credit Union National Association, a trade association in Washington, D.C., and Madison, Wis., advises students to evaluate the rules and rates of several banks and credit unions before picking the right one.

"It does really pay to shop around," he says.