At more than 800 U.S. colleges and universities, college students can access certain types of financial aid they receive via multipurpose debit cards. These all-in-one “campus cards” issued by universities, in partnership with a financial institution, can be used to do a number of things, such as pay for campus dining, or for checking out library books. In many cases, the cards can also be used to access financial aid.
But often, when students access their aid by using these cards, they incur fees. Transaction-based fees—such as ATM withdrawal fees, inactivity fees, and swipe fees—abound. In some cases, students will incur a fee by simply checking the balance.
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Now, three Federal agencies are taking note. The research arm of Congress, the Government Accountability Office, recently completed a yearlong study of college debit cards, and recommended that the Department of Education require colleges and their financial service partners to present information to students about these debit cards in a more even-handed fashion.
In many cases, the marketing material behind the campus cards emphasizes that students will receive their financial aid immediately if they agree to have it loaded on the campus card, versus waiting a number of business days to receive the funds via check or direct deposit. And that same marketing material tends to gloss over the fees students incur when they access the financial aid. The Department of Education report on financial aid at four colleges concluded that fees were, in some cases, “unique or higher than those provided by alternative financial institutions.”
Currently, the Consumer Financial Protection Bureau has begun an inquiry into campus debit cards. Even though the Credit CARD Act of 2009 restricts certain types of credit card marketing on campus, that law focuses on credit cards, not other types of financial products.
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