On the surface, the competition for student funds doesn’t seem as if it should yield much interest from financial institutions, given that the typical student’s income is below poverty levels. However, student checking accounts are often one way funds are dispersed by parents who must cover the cost of books, personal expenses and even tuition and room and board.
Educational institutions also need to disburse funds to students as refunds for tuition reimbursement. Sometimes, refunds get gummed up as checks must be issued, taking time and costing the school money.
Electronic Funds
One company, Higher One, has been offering a payment system for colleges and universities, streamlining the electronic payment option to students. Since 2000, Higher One has dominated the market, but will soon be joined by student loan lender Sallie Mae whose own program launches this June reports “The Chronicle for Higher Education.”
That program, the “Sallie Mae No-Fee Student Checking account with Debit MasterCard,” is designed to disburse student refunds and financial aid on the same day the transaction is authorized. Students will be able to gain access to their funds immediately, avoiding the usual two or three day lag they may typically experience with their banks.
Sallie Mae Bank
Explaining the new program is Kelly Christiano, who leads the Campus Solutions and Savings businesses at Sallie Mae, “Sallie Mae has been helping colleges and universities focus on educating students rather than processing payments for more than a decade. Our state-of-the-art technology and 40 years of experience enables us to be the lowest cost provider in the market helping schools improve efficiency and saving students money.”
Sallie Mae has an advantage in that its Sallie Mae Bank, FDIC-insured at that, can give students fee-free access to more than 35,000 ATMs nationwide. That’s an advantage students want and need.
Administrative Relief
Like Higher One, the Sallie Mae program outsources a program once handled by universities themselves. Neither company publishes what its service costs schools, but given that its own staffing needs can be reduced or curtailed, one source of administrative headache is removed.
Higher One has a similar banking arrangement with The Bankcorp Bank, another FDIC-insured financial institution. Higher One administers its Debit MasterCard through its own operation.
Sources: Sallie Mae, Higher One and the Chronicle of Higher Education
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