Congressional investigators have called for greater oversight of the use of college-issued debit and prepaid cards among students. The cards often are used to access financial aid and may double as a student ID card. Although convenient, the Government Accountability Office (GAO) says the cards are often accompanied by fees similar to those of other debit cards.
Some students pay out-of-network ATM fees or a fee for entering a PIN to receive money instead of signing to get cash back. It is unclear how much money is made from these fees, but Federal Deposit Insurance Corp. staff members told GAO that it has received complaints from students about fees ranging from hundreds of dollars to more than $1,000. GAO reports that at least 850 schools, or 11 percent of colleges and universities, had agreements to provide debit or prepaid cards as of last July.
GAO recommends that contract terms between colleges and the financial institutions that supply these prepaid cards be made more transparent. Because students are supposed to have convenient access to financial aid, the agency asked the Education Department to define what that means regarding access to ATMs. GAO also called on the department to develop requirements that would help ensure that students know all their banking options. A response by the Education Department said that officials agree with the recommendations and will hold a rule-making session to address the issue.
The National Association of College and University Business Officers issued "best practices" guidance encouraging colleges and universities to put students' interests first, to negotiate low- or zero-fee financial services, and to make agreements transparent. The Consumer Financial Protection Bureau says that 69 percent of schools report that their arrangements with financial companies spell out the terms of the partnership between the school and the financial company. It noted, however, that students can have difficulty finding that information.