12/16/2014 04:22 pm ET Updated Dec 16, 2014

Colleges Cut Deals With Wall Street To Steering Students Into Debit Card Accounts

Sean MacEntee/Flickr

But while colleges have moved away from credit card agreements, they have inked more deals to market debit and prepaid cards that are not subject to the restrictions of the CARD Act. According to the General Accountability Office, at least 852 schools, or 11 percent of colleges and universities, now promote debit or prepaid cards to students.

The cards became a popular way for schools to disburse what are known as credit balances, the money left over when a student’s financial aid award exceeds the tuition and fees owed to their schools. Researchers at the GAO found that most schools not only let students receive federal aid on debit and prepaid cards, but also outsource the processing of that money to their financial partners on the card deal.

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