Wednesday, February 19, 2014
In February 2014, the General Accountability Office released a report on debit and prepaid card programs on college campuses, urging the U.S. Congress and Department of Education to take action.
Campus banking relationships have been under fire for two years since the Public Research Interest Group (PIRG) released a critical report claiming that the programs take advantage of students. The GAO report examines the fees that the programs charge students, ATM accessibility and the programs’ transparency – or lack thereof.
Industry experts were not surprised by the report’s recommendations, and most reaction has been largely positive citing the GAO report as a significant improvement over the highly judgmental, and many say flawed, PIRG report. Still an issue, however, is the problem or confusion differentiating student banking and financial aid dispersal. While the accounts used are sometimes the same, frequently they are not. The majority of federal official’s concerns revolve around student access to federal financial aid dollars and have – or at least should have – little do with a student bank account, whether tied to the campus ID card or not.
The GAO has two recommendations for the Department of Education. First, it should specify what constitutes convenient access to ATMs or bank branch offices for students receiving federal student aid funds. Second, it should develop requirements for schools and card providers to present neutral information to students about their options for receiving federal student aid funds.