Debit cards, fast replacing cash and checks, have become a common vehicle for colelges to dole out financial aid. Students have complained the card issuers are ripping them off, pennies at a time and thsoe complaints have reached authorities.
The Consumer Financial Protection Bureau announced on Thursday that it has launched an inquiry into whether school-issued debit card agreements are in the best interest of students.
The government agency, which enforces federal consumer financial laws, last year began hearing from students who’d been charged fees to withdraw money to pay for college.
California Congressman George Miller said his office found that nearly one million college students in the state have very little access to fee-free ATMs. Only one on each campus.
“Too many students,” Miller said in a statement “have been slammed with hidden fees and penalties that cut into their already limited financial aid dollars. And if students don't pay close attention, they can find precious aid dollars wasted on debit-card fees.”
The Consumer Protection Bureau offers this advice to college students about to receive loans, scholarships, or any other kind of aid:
- You can’t be required to use a specific bank or card. There may be a financial institution that operates on your campus, but you generally can’t be required to use a specific account or card to access your student aid. If you have received a federal student loan, your school must provide a paper check or cash option.
- Consider choosing an account before arriving at school. Shop around, and don’t feel limited by the banks operating ATMs on or near campus. Some financial institutions don’t charge you for using any ATMs, and some will automatically reimburse you for fees charged for using an out-of-network ATM. Many institutions also provide a mobile phone app to remotely deposit paper checks.
- If your school offers it, sign up for direct deposit as soon as possible. If your school offers direct deposit, you may be able to provide the school with your account information in order to access your funds more quickly.