WASHINGTON (AP) — Small fees add up for college students using college-issued debit and prepaid cards, which are often used to draw financial aid, and congressional investigators on Thursday urged greater oversight of their use.
These types of cards are becoming more common on campuses and double sometimes as a student ID card. They are popular with both college administrators and many students because of the convenience, but using a third-party financial provider can also save colleges and universities money as they offer services such as distributing financial aid or making tuition refunds.
The Government Accountability Office said the fees generally are similar to those other debit cards charge. But, it said, some students end up with out-of-network ATM fees, and some cards have terms that charge a fee if students enter a pin number to receive money instead of signing to get cash back.
It says it's unclear how much money is garnered from these fees, but Federal Deposit Insurance Corporation staff members told GAO that it has received complaints from students of fees ranging from hundreds of dollars to more than $1,000, the report said.
The GAO says contract terms between colleges and financial institutions should be more transparent. Students are supposed to have convenient access to aid money, and GAO asked the Education Department to define what that means in terms of access to ATMs. It also called on the department to develop requirements to ensure students know all their banking options.
A response by the department included in the report said Education Department officials agree with the recommendations. The department has convened a rule-making session next week to address the issue.
The National Association of College and University Business Officers has issued "best practices" guidance to colleges and universities that encourages them to keep students' interests first, to negotiate low- or no-fee financial services and to make agreements transparent.
"Just as colleges and universities strive to provide high-quality academic experiences for their students, they must ensure that school-sanctioned services are also good consumer values," the guidelines say.