When students receive financial aid, they can receive the funds in several ways. Tuition and room and board could be paid to their college directly, or the monies might go to the student who then pays his or her college bills. Either way, monies for books and other college costs do have to go into student hands, and many colleges are doing so by loading their student college ID cards with financial aid funds. Then the student ID becomes a debit card or a pre-paid cash card.
These cards can be convenient and do allow students to manage their own financial aid monies, but there is big catch that most students are not aware of with these cards.
That catch is there are fees, similar to bank fees, attached. The fees include charges for maintenance of the card, for overdrafts, and even for using PIN numbers instead of signatures. This raises the question: Why should your student aid be used for bank charges and not for you education!
Colleges and universities have been allowing students to receive their financial aid funds on cards that are processed through their bank partners, and then the schools receive kickbacks. As of 2013 852 schools, 11% of all US colleges and universities, were peddling these card to their students. The contracts they have with banks are not public, but in 2012 the US Public Student Research Group Education Fund revealed an agreement between Ohio State University and Huntington Bank. For letting students receive their financial aid monies through this card system provided by Huntington, Ohio State would receive 25 million dollars over 15 years.
So here’s out caution: Ask for full disclosure and for options for getting your financial aid at the college(s) of your choice, and choose the school that isn’t scamming you.
