GAO urges more transparency, fee changes for student debit cards

http://www.latimes.com/business/money/la-fi-mo-gao-student-debit-cards-20140213,0,234616.story



The U.S. Government Accountability Office on Thursday recommended changes to student debit cards.

GAO urges more transparency, fee changes for student debit cards
By Ricardo Lopez
February 13, 2014, 12:31 p.m.

The U.S. Government Accountability Office on Thursday urged more transparency in the debit card system used to electronically disburse college students' financial aid, and said that transaction fees for the cards quickly add up.

In a report, the GAO said that the use of debit cards has risen over the last decade. Though only 11% of schools in the U.S. have contracts with companies to offer the debit cards, the 852 schools that do are disproportionately large, accounting for 40% of U.S. college enrollment, according to the GAO.

Congressional investigators said that though fees on the debit cards are comparable to conventional bank-issued cards, two large companies charge fees for purchases made using a personal identification number, or PIN. Those charges can quickly accumulate.

"No basic or student account that we reviewed for comparison purposes charged a transaction fee for using the account’s debit card," the report said. The GAO said that about a third of all PIN transactions are for amounts less than $15, which can make a 50-cent fee an expensive addition relative to the amount of the transaction.