Managing college money
Practical advice on how to make sure you’re getting the best deal.
Student Banking: Managing your college money
Unlike that first school ID photo, your first banking relationship could last long after you graduate. Making a smart decision now will mean fewer surprise fees that can add up later.
Key Questions
Choose an account as soon as possible - you should try to find one before you start school.
Once you have a bank account, sign up for direct deposit with your school before classes start. If you are expecting money from your financial aid office, you'll often get it faster this way - it can be weeks before the school gets to writing you a paper check.
Dig deeper when accounts are marketed as "free" or "easy" - very few accounts charge no fees at all.
Does your bank charge monthly fees? Many require minimum balances or regular direct deposit to avoid monthly fees. What about out-of-network ATM fees, overdraft fees, fees to use your debit card, and fees for services like online bill-pay?
Knowing if and when fees will be charged could save you hundreds of dollars in fees each year. While half of young Americans never overdraft, the other half average approximately seven overdrafts a year. Overdrafts can cost more than $30 each; that's potentially a lot of money taken out of your pocket.
No. Schools cannot require you to use their bank, so shop around.
- Don't feel limited to only the banks or credit unions that have ATMs on or near campus; some will automatically reimburse fees for using any ATM.
- Consider accounts that offer services like remote check deposits, mobile apps, and online bill-pay. Signing up for a bank account now can save you headaches later, and researching accounts with the lowest fees can save you money.
When should I get a bank account?
Choose an account as soon as possible - you should try to find one before you start school.
Once you have a bank account, sign up for direct deposit with your school before classes start. If you are expecting money from your financial aid office, you'll often get it faster this way - it can be weeks before the school gets to writing you a paper check.
How do I avoid paying unexpected fees?
Dig deeper when accounts are marketed as "free" or "easy" - very few accounts charge no fees at all.
Does your bank charge monthly fees? Many require minimum balances or regular direct deposit to avoid monthly fees. What about out-of-network ATM fees, overdraft fees, fees to use your debit card, and fees for services like online bill-pay?
Knowing if and when fees will be charged could save you hundreds of dollars in fees each year. While half of young Americans never overdraft, the other half average approximately seven overdrafts a year. Overdrafts can cost more than $30 each; that's potentially a lot of money taken out of your pocket.
Do I have to get an account with the bank at my school?
No. Schools cannot require you to use their bank, so shop around.
- Don't feel limited to only the banks or credit unions that have ATMs on or near campus; some will automatically reimburse fees for using any ATM.
- Consider accounts that offer services like remote check deposits, mobile apps, and online bill-pay. Signing up for a bank account now can save you headaches later, and researching accounts with the lowest fees can save you money.
Action Steps
- Choose an account as soon as possible.
- Avoid paying unexpected fees.
- Sign up for direct deposit as soon as possible.
action guide
Choosing a bank account
What you need to know
Shop around, and don't feel limited to only the banks or credit unions that have ATMs on or near campus; some will automatically reimburse fees for using any ATM. Consider accounts that offer services like remote check deposits, mobile apps, and online bill-pay.
Keep in mind
Dig deeper when accounts are marketed as "free" or "easy" - very few accounts charge no fees at all.
Signing up for a bank account now can save you headaches later, and researching accounts with the lowest fees can save you money.
| Virtual checking account | Student checking account | School-affiliated banking services | |
|---|---|---|---|
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Some financial institutions provide exclusively online banking services that are comparable to a traditional checking account | Some banks and credit unions offer student checking accounts with discounted fees to establish long term relationships with new customers | Many colleges have a bank they partner with to offer students campus affiliated checking accounts or prepaid debit cards |
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May waive or reimburse ATM fees, even those for out-of-network ATMs Often include online banking and bill-pay Often have mobile apps for things like remote check deposit Often won't let you overdraft your account |
Free access to in-network ATMs May include online banking and bill-pay Access to traditional in-person bank branches |
On-campus branch locations and ATMs May include online banking and bill-pay May offer discounts at local or campus businesses Sometimes your student ID card can be used to access your money |
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Generally do not have in-person customer service options |
Possibly charge monthly maintenance fees - up to $12 a month in some cases - if you don't meet the minimum balance or the bank's other enrollment criteria, like maintaining a full-time enrollment status at school May charge more than $30 per overdraft, which can add up quickly, especially if you opt in to coverage for ATM and debit card overdrafts |
Could charge fees every time you use your debit card Don't always provide the ability to write checks May charge inactivity fees each month for not using your account frequently Possibly charge monthly maintenance fees - up to $12 a month in some cases - if you don't meet the minimum balance or the bank's other enrollment criteria, like maintaining a full-time enrollment status at school May charge more than $30 per overdraft, which can add up quickly especially if you opt in to coverage for ATM and debit card overdrafts |
Financial aid disbursement
What you need to know
After your school takes out the cost of tuition, fees, and any on-campus living expenses from your total financial aid award, there is often money left for you to use for other expenses, like books.
Keep in mind
You normally have several options for how you get that money, including direct deposit to a bank account, to a card that might also double as your student ID, by check, or cash.
| Direct deposit to personal account | Paper check | Financial aid disbursement account | |
|---|---|---|---|
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Once you choose the best bank account for you, share that information with your school, and they will deposit additional aid funds directly to that account | Schools generally must offer a paper check or cash option no later than 14 days after the funds are available |
A school may partner with a bank or another third party to handle financial aid disbursements The most common option is a debit card attached to bank account that has your financial aid deposited in it You are not required to use the bank chosen by your school |
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You can pick an account that offers what you need and charges few or no fees You can access the disbursement quickly with direct deposit |
You can deposit your money into the account of your choice and do not need to provide additional personal financial information | Often the quickest way to access to your disbursement if you haven't already provided your school with direct deposit information |
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No significant risks |
If you use a check casher, they may charge as much as 4% of the check amount You may not be able to access your funds immediately after making a deposit |
The school makes the agreement with the bank, not you You won't be able to shop for a low-cost product, and these cards and accounts may come with fees you could avoid by shopping |
Ask CFPB!
What is a financial aid disbursement?Your financial aid disbursement is the money left after your school takes out the cost of tuition, fees, and any on-campus living expenses from your total financial aid award. You normally have several options for how you get that money, including direct deposit to a bank account, to a card that might also double as your student ID, by check, or cash.
When you spend more money than you have in your account, your bank will likely charge you an overdraft fee. So a $4 cup of coffee can end up costing you $35 or more. You can be charged several overdraft fees in a single day and even more in extended overdraft charges if your account remains overdrawn for a few days, so be careful - these fees add up quickly.
To avoid paying overdraft fees, monitor your accounts carefully and consider:
- Not opting-in to services that pay for overdrafts connected to ATM or one-time debit card withdrawals
- Linking your account to a savings account - you may still pay a fee for transferring funds from your savings account, but it is usually much lower than an overdraft fee
- Choosing an account that does not allow overdrafts
Choose an account as soon as possible.
Avoid paying unexpected fees.
Sign up for direct deposit as soon as possible.
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