Time to think about going to campus, some for the first time and some as veterans. Whether a newbie or a vet, many of you will have financial aid. But, do you know that after a college has deducted tuition and fees, there may be a credit balance? This balance is called a credit balance refund and can be used for other costs like text books or living expenses.
In the past, universities and colleges have hired private institutions to distribute these funds. Often the private companies would send materials indicating a student needs to open a debit card account with a private bank or might even send out a debit card to activate for timely deposit of these funds. Unfortunately, many of these debit card accounts have very high fees.
As of July 1 (2016) federal rules governing this part of financial aid have changed. No longer can schools or financial companies direct students to open special accounts in order to get their financial aid balance funds. Colleges must give a neutral menu of ways to receive these fund. The new rules also prohibit debit accounts from charging excess fees, particularly for overdrafts and for transactions.
So where should you have your refund deposited for your use? The best place is in your own banking account. If you do not have your own account, start shopping around for a bank account. Make sure to look for the lowest fees and the best services as well as ATM availability and accessibility. Don’t forget that credit unions offer good banking accounts and are often on or near campuses. You can also always use the Consumer Financial Protection Bureau to find out if you college has agreements with private banking institutions. The Bureau also evaluates bank accounts for you to check out.
College students need to look out for their money. Now there are better ways to protect even your financial aid.