The U.S. Department of Education in coming months will propose new consumer protections for college students who receive financial aid through school-branded debit and prepaid cards, if consensus is not reached on the issue by a panel of outside experts.
Federal officials are exploring whether "to provide additional banking protections to the more than 9 million students with campus debit cards," according to a document prepared for a recent hearing on the matter. Although schools must offer other options besides their own cards, critics say students rarely opt out because the cards enable them to more quickly receive financial aid money.
Consumer advocates are pressing the government to enable students to more easily access funds via direct deposit into a pre-existing bank account. The Consumer Financial Protection Bureau and congressional Democrats, meanwhile, have voiced concern about relationships between schools and financial institutions, which sometimes pay schools for promoting the cards.