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GAO: Actions needed to address ATM access, student choice and transparency

General Accountability Office calls on Congress to take action related to banking on college campuses

The General Accountability Office (GAO) has released a new report on banking and pre-paid debit cards at colleges and universities, and it calls on the Congress and the Department of Education to take action to solve three keys areas that their report takes issue with.

In recent years, campus banking relationships have faced scrutiny following a critical report by the Public Research Interest Group (PIRG) that said the programs take advantage of students. The GAO report looks at the fees that the programs charge students, ATM accessibility and the programs’ transparency – or lack thereof. According to, a publication on campus cards and college and university identification and security, industry experts are not surprised by the report’s conclusions and most responded favorably to the GAO’s report over the PIRG analysis, saying that particular report was “highly judgmental.” Still an issue, however, is the problem of differentiating student banking and financial aid dispersal.

According to the GAO report, as of July 2013, at least 852 schools, or 11 percent of U.S. colleges and universities, had agreements to provide debit or prepaid card services to their students. In the majority of agreements, the schools outsourced to their card provider the process for paying financial aid and other funds via college cards and other methods. Some schools also used college cards as student identification. The dominant provider was Higher One, a nonbank financial firm that had a 57 percent market share in 2013, as measured by number of card agreements.


- Fees. GAO found that fees charged by college card providers generally were comparable with those for similar products provided by banks, although some college card fees were slightly higher than those of credit unions.

- ATM access. Officials at nine selected schools generally did not report significant issues with the availability of fee-free automated teller machines (ATM) on campus

-Neutrality. GAO found instances in which schools or card providers appeared to encourage students to enroll in a college card rather than present neutral information about payment options

Most offered students the ability to receive federal student aid and other payments on a card. The report looked at the functions of college cards and the chaceteristics of schools and car providers offering the cards and the benefits and concerns regarding the cards.

In the report, the GAO is asking Congress to demand transparency from the providers on the agreements for the colleges and universities with the Bureau of Consumer Financial Protection (CFPB). It also calls on the Department of Education along with the CFPB to give students ‘objective and neutral information’ on their options for receiving federal student aid payments.

The Education Department agreed with GAO’s recommendations, claiming it will address these issues via its current Negotiated Rulemaking process. Earlier this month, the Department selected a committee and initiated the process to consider regulations addressing campus banking and financial aid dispersal.


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Contributing Author

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Alexis Harrison

Alexis Harrison is a Connecticut-based writer and public relations professional whose career spans both print journalism and broadcast news. Alexis started her professional life as...

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