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Washington, D.C. – The Consumer Financial Protection Bureau today issued a consumer advisory on its blog providing tips for students expecting scholarships and loans onto “what appears to be – a school-endorsed debit card.” The blog post comes just a day after the FDIC, a bank regulator, fined the largest campus debit card provider, Higher One, for unfair and unsafe practices. The bureau is also asking consumers to share their experiences and provides a tool to submit complaints.
“That first bank account you get as a student may continue with you for decades and such an important choice shouldn’t be skewed by bank logos on university letterhead or student IDs,” observed Rich Williams, U.S. PIRG Higher Education Advocate and co-author of a report on campus debit cards. “If you’re a student and are happy with your current bank account insist on receiving your funds directly into that account. For students who don’t yet have a bank account, shop around and you may find a better option off campus.”
The CFPB provided three specific recommendations for students:
First: “You can’t be required to use a specific bank or card” to receive aid. Schools are required to provide a paper check or cash if desired.
Second, “Consider choosing an account before arriving at school.” Students should shop around for an account before arriving at school. Don’t fee limited to just the ATM brands on campus.
Finally, “If your school offers it, sign up for direct deposit as soon as possible.” Get your financial aid money into a personal bank account as soon as possible.
Currently, over 900 campuses nationwide enrolling over 9 million students have affinity partnerships with financial intuitions to provide debit cards to students, according to the recent report, “The Campus Debit Card Trap, by the U.S. Public Interest Research Group Education Fund, which found that these partnerships allow banks and financial firms to control or influence federal financial aid disbursement, which means that they sometimes come at a cost to students, high bank fees.
“Kudos to the CFPB for issuing these tips,” concluded Williams. “We pledge to work with the CFPB and other agencies to ensure that campus debit card partnerships offer good deals, and fair deals, for students.”
To see the consumer advisory from the CFPB click here: http://www.consumerfinance.gov/blog/consumer-advisory-accessing-your-scholarships-and-student-loan-funds/
For a full copy of the PIRG report click here: http://uspirgedfund.org/reports/usf/campus-debit-card-trap
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U.S. PIRG, the federation of state Public Interest Research Groups, is a non-profit, non-partisan public interest advocacy organization.
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