Welcome Students! Need a Checking Account?

"In her first weeks of graduate school, Akanksha Sharma had a problem: an ever-growing shopping list. Textbooks for classes, essentials for her new apartment, lab and activity fees, notebooks, folders, pens, graph paper, and so on: If there was any money left, she’d even consider buying something to eat," according to The Chronicle of Higher Education.

"A paycheck was on the way for Ms. Sharma’s work as a research assistant at the University of Arizona. She just needed a place to deposit it. Fortunately, Wells Fargo Bank had a branch on campus, and various university materials described the company as its 'official banking vendor.' It was an easy choice.

Little did Ms. Sharma know, she wasn’t just getting a college-sponsored checking account. She was also signing up for an expensive financial re-education.

Ms. Sharma had arrived recently from India, where she had found the terms and conditions of her state-run, low-fee bank account easier to understand. But in America, she said the rules for her checking account confused her, with every misstep triggering a hefty penalty charge. Those fees slowly drained her meager savings. In her first 18 months, Ms. Sharma paid nearly $600 for overdrafts, ATM withdrawals, and other issues, according to bank statements provided to The Chronicle.

... Ms. Sharma is not the only student whose college experience has included a hard lesson in finance. More of her peers are enrolling in checking accounts through their colleges, thanks to a surge in agreements the institutions are making with banks. Wells Fargo’s presence at the University of Arizona that day was the result of one such agreement.

...The practice makes financial sense for both the banks and the institutions, but opponents argue that the agreements prey on students. Young college students are relatively high-risk checking-account holders: Many have limited incomes, and many more are managing their own finances for the first time. As a result, they are more likely than other account holders to incur overdraft fees.

Consumer advocates argue that if a college points a student toward a checking account with various fees, and that student then incurs such charges, the university bears some responsibility. The government requires colleges to make some basic disclosures on their websites about the details of such bank deals. But advocates say institutions that stand to benefit from connecting banks with students should feel obligated to take further steps to protect those students’ financial well-being."

Viewing this full article may require a subscription to The Chonicle of Higher Education.

NASFAA's "Headlines" section highlights media coverage of financial aid to help members stay up to date with the latest news. Inclusion in Today's News does not imply endorsement of the material or guarantee the accuracy of information presented.

 

Publication Date: 12/7/2017

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