The Government Accountability Office (GAO) recently published a report on student debit and prepaid cards that recommend stricter regulation to protect students, including protections against high fees. The GAO examined more than 800 campuses and determined that fees on student cards generally are not higher than basic student checking accounts. However, because the GAO was unable to obtain specific fee information from some student card providers, it recommended that Congress make such disclosures mandatory.
The GAO’s concern may stem from a finding that some students are charged a fee for using prepaid cards authenticated with PINs; whereas such fees are not typically charged for debit cards. The report further notes that while only 11 percent of colleges and universities had student card agreements, 40 percent of the students at such schools are enrolled in the programs, suggesting that students may not be aware that the card programs are optional. Finally, the report notes that use of incentive programs between banks and colleges regarding student card accounts are on the decline due to negative publicity.
The report is the latest attack on student cards and could portend further regulation. It also emphasizes the importance of clear and conspicuous disclosures. More information may be found here.