Education dept to test putting federal aid in debit cards

[sofamonkey]

In order to track, and possibly restrict, spending of student loans, they are thinking about putting financial aid funds on debit cards.

thehill.com/homenews/administration/371334-ed-dept-to-test-putting-federal-aid-on-debit-cards

“The new program would be the latest attempt by the Education Department to crack down on the use of federal funds. Last year, the department limited how much in loan forgiveness students who were defrauded by their colleges could receive.”

[rupertpenny]

This is a terrible idea for a million reasons. But just practically speaking I used my loan money to pay for rent and I’ve never been able to pay my rent by debit card. Maybe Betsy Devos doesn’t consider housing an appropriate use of federal funding?

[tres3]

This will only benefit the debit card companies who would make money off this. Many schools do not allow you to use debit/credit cards to pay tuition because of the fees.

[Deleted]

My university charges a 3% fee to use debit/credit cards, so I'm sure they'd love this.

I like how everyone's solution to fix higher education and college costs is to charge a metric assload of additional fees and place additional hardships on students. Let's not address the big elephants in the room or the grown ass adults making poor decisions that effect the entire student population. Nope, lets make it even harder to go to college! That's the answer!

[Velar Fricative]

I feel like everything goes on debit cards these days, like rebates, paychecks (my employer has this option for people who don't want to or can't do direct deposit), etc. My paid maternity leave benefits from NJ were sent to me on a debit card, which was annoying. It was even more annoying for SIL who didn't realize she was supposed to keep that card from her first ML, so she had to wait even longer for a replacement (and therefore had to wait even longer for the money).

In the abstract, it's not a bad idea and I don't mind it as simply an option among various other options if it works best for some people, but that money will likely have to be used for at least one major expense that can't be paid for with a debit card. And ditto re: benefiting banks the most.

[sofamonkey]

Jan 30, 2018 9:20:23 GMT -5 Velar Fricative said:

I feel like everything goes on debit cards these days, like rebates, paychecks (my employer has this option for people who don't want to or can't do direct deposit), etc. My paid maternity leave benefits from NJ were sent to me on a debit card, which was annoying. It was even more annoying for SIL who didn't realize she was supposed to keep that card from her first ML, so she had to wait even longer for a replacement (and therefore had to wait even longer for the money).

In the abstract, it's not a bad idea and I don't mind it as simply an option among various other options if it works best for some people, but that money will likely have to be used for at least one major expense that can't be paid for with a debit card. And ditto re: benefiting banks the most.

Theoretically, it’s not the worst idea to have things on a debit card. Except the part where they’ll monitor and restrict their spending.

[mbcdefg]

There would be ATM transaction fees if people chose to use the cards to withdraw cash, correct?

[2curlydogs]

Oh, so THAT was the source of the screaming and howling I heard this morning - my financial aid department reading the news.

[StrawberryBlondie]

Do they have a plan for how to deal with people on programs where they basically can't work so they have to use their loan money on living expenses? Like law students? I'm assuming other grad programs are similar.

I worked in law school, but couldn't more than 20-hrs/week and with my class schedule first year, it was really more like 5-10 hrs/week. So, my loan money went to rent, gas, groceries, etc. The other option was to go deeply in credit card debt.

[tres3]

Jan 30, 2018 10:05:01 GMT -5 StrawberryBlondie said:

Do they have a plan for how to deal with people on programs where they basically can't work so they have to use their loan money on living expenses? Like law students? I'm assuming other grad programs are similar.

I worked in law school, but couldn't more than 20-hrs/week and with my class schedule first year, it was really more like 5-10 hrs/week. So, my loan money went to rent, gas, groceries, etc. The other option was to go deeply in credit card debt.

No Skittles for Law Students

[sent]

There definitely has to be some CC processors behind this "brilliant" idea.

[msmerymac]

Jan 30, 2018 10:05:01 GMT -5 StrawberryBlondie said:

Do they have a plan for how to deal with people on programs where they basically can't work so they have to use their loan money on living expenses? Like law students? I'm assuming other grad programs are similar.

I worked in law school, but couldn't more than 20-hrs/week and with my class schedule first year, it was really more like 5-10 hrs/week. So, my loan money went to rent, gas, groceries, etc. The other option was to go deeply in credit card debt.

Oh sure. The people proposing this are going to invest in these debit card companies and make bank from the fees when you transfer the funds from the card to a cashier's check to pay your rent. That's the plan. 

[rondonalddo]

Well guys they're obviously solving the most pressing problem of college tuition-- the mechanics of payment. (ETA: AND solving it in the most Republican-y way possible: lining the pockets of private industries while limiting the ability of folks who don't make a living wage to afford housing and other living costs!)

[icedcoffee]

I really hate those prepaid debit cards and find it obnoxious that they've become the way for a lot of things. Unemployment in my state comes on a debit card too. It's so hard to spend the end of it if you don't know exactly how many cents are left. I prefer checks or bank transfers. I realize not everyone has a bank account though.

[shortstax]

There's been a response for more info from Democratic Senators: www.nasfaa.org/news-item/14101/Democrats_Push_FSA_for_Security_Information_on_Prepaid_Financial_Aid_Card

A group of Democratic senators this week sent a letter to Federal Student Aid (FSA) Chief Operating Officer A. Wayne Johnson, urging him to give more detailed information on how the agency would structure a proposed prepaid financial aid card, expressing concern that students and parents could be taken advantage of through “inappropriate fees and practices.”

In the letter, the senators — Dick Durbin of Illinois, Elizabeth Warren of Massachusetts, Jack Reed of Rhode Island, Richard Blumenthal of Connecticut, and Sherrod Brown of Ohio — noted that there have been problems with similar proposals in the past.

The senators cited a 2012 report from the U.S. Public Interest Research Group that they said showed that financial institutions that offered these types of cards to college students used “a host of exploitative fees and practices.”

“Students were taken advantage of through unreasonable and inappropriate fees which resulted in tremendous revenues for financial institutions while siphoning off student aid dollars from students and taxpayers,” the senators wrote.


**
Valid, evidence-based concerns....yet I feel that will probably fall on deaf ears.

[sent]

Oh wait, I bet this is going to be one of those cards that automatically charges a monthly fee if you don't use the balance up within a certain amount of time.

This is the second time this week I am reading about great solutions to problems that don't seem to exist. Do students still take the extra loan money and go to Cancun? What exactly is the problem here?

[amberlyrose]

Jan 30, 2018 10:05:01 GMT -5 StrawberryBlondie said:

Do they have a plan for how to deal with people on programs where they basically can't work so they have to use their loan money on living expenses? Like law students? I'm assuming other grad programs are similar.

I worked in law school, but couldn't more than 20-hrs/week and with my class schedule first year, it was really more like 5-10 hrs/week. So, my loan money went to rent, gas, groceries, etc. The other option was to go deeply in credit card debt.

Or you could just use your trust fund money or ask your parents to help with living expenses! duh. 

They do not understand 99% of the population and I guarantee someone in the room brought up parental support.