Beware Fees on Student ID Cards Doubling as Debit Cards

Student ID cards today do much more than confirm that you belong on campus. Now, some schools are even loading financial aid on their ID cards. Financially strapped colleges are partnering with banks and financial-services firms, which pay for the privilege in hopes of creating long-term banking relationships with students. But before making an ID card a debit card or opening an account, students should evaluate offers carefully. Don’t be swayed by a school logo on the plastic.

Some 900 schools—representing nine million college students, or two of every five students nationwide—have a debit card partnership with a financial institution, according to a recent study by U.S. Public Interest Research Group, a consumer organization. The cards can typically be used anywhere that accepts Visa or MasterCard, or at various ATM networks. At 750 schools, many students receive their financial aid on a prepaid debit card.

But such prepaid cards have pitfalls. Students don’t pay to get their aid disbursed. But if they reload the card with additional funds, check their balance or swipe the card at a cash register, they could be charged a fee. Students can always choose to receive their aid by check, but aggressive marketing often leaves them with the impression that the bank-linked card is best, says Rich Williams at U.S. PIRG. And students might have to wait for a check.

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Even if your school has a partnership with a bank, you don’t need to open a checking account there, the school’s endorsement notwithstanding. But some partnerships do offer good deals for students. Wells Fargo waives its standard $3 monthly service fee for students at partner schools, including Texas A&M and the University of Arizona, who link a debit card to a Wells Fargo College Combo account. U.S. Bank provides four free out-of-network ATM withdrawals every month for student checking accounts.