A majority of community colleges and state universities contract with banks and other providers to offer students debit or prepaid cards with substantial fees, reports U.S. PIRG. Students can receive financial aid payments through the debit cards. Colleges receive significant revenue.
Students like the convenience of debit cards: There’s no need to wait for a check to arrive in the mail or fill out forms for direct deposit. But students can end up paying to access their financial aid, U.S. PIRG warns.
Fees can be steep and frequent for students using the university-adopted cards, including a variety of per-swipe fees, inactivity fees, overdraft fees, ATM fees and fees to reload prepaid cards.
Colleges should negotiate no-fee access to financial aid before approving debit-card deals, the nonprofit suggests. In addition, students should be protected from aggressive “push” marketing.
Miami Dade College and several four-year institutions have pledged financial aid transparency. Starting with the 2013-2014 school year, students will be told:
How much one year of college will cost;
Financial aid options, differentiating between grants and scholarships, which do not have to be repaid, and loans, which do;
Net costs after grants and scholarships are taken into account;
Estimated monthly payments for the federal student loans the student would likely owe after graduation; and
Student results information, including rates at which students enroll from one year to the next, graduate and repay their loans.
The U.S. Department of Education, in partnership with the Consumer Financial Protection Bureau, has created a model Financial Aid Shopping Sheet that will let prospective students compare aid packages offered by different institutions. It will be revised based on feedback received by June 20.