As a freshman at Clark Atlanta University, Tyler Joshua Green discovered it didn’t take long to wipe out his weekly budget.
“So many costs arise when you’re a college student, like eating out at different places,” he says.
The religion major from Indianapolis became budget-savvy pretty quickly. Though he has a debit card, Green prefers to use cash for his walking around money. He ticks off a couple of his saving strategies: “I don’t go into the grocery store when I’m hungry. I don’t get a cart; I use a basket.”
Though Green learned to budget early in his college career, many students have more of a challenge, in part because of easy access to banking services. The Consumer Financial Protection Bureau recently opened an investigation examining whether students genuinely benefit from some of the banking and financial services marketed to them through their colleges.
Today, many colleges and universities offer student ID cards that double as credit cards and debit cards through school-affiliated bank accounts. Some cards allow students to access scholarship and student loan money.
A report from the U.S. Public Interest Research Group Education Fund, titled The Campus Debit Card Trap, notes how some accounts include large fees for balance inquiries and transfers. Some students pay the fees with their federal student aid allowance.
The Federal Deposit Insurance Corporation settled last year with two banks for “unfair and deceptive practices.” The banks paid the FDIC restitution of approximately $11 million. The CFPB now suggests students use direct deposit instead of school debit cards. According to the organization, 799 higher education institutions, foundations and alumni associations collected a combined $62,428,281 from card issuers in 2011.
