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College students will have more choices when it comes to picking what could be their first debit card, starting next year.

The Education Department finalized new rules earlier this week that prohibit colleges and universities from requiring students or their parents to open a certain account with a specific financial institution in order to receive financial aid. The rules also prohibit banks or prepaid debit card providers who partner with academic institutions from charging excessive fees, including overdraft or transaction swipe fees.

The rules were proposed after a report from the U.S. Government Accountability Office found an increasing number of schools were partnering with financial institutions to offer college-branded debit or prepaid cards that, in some cases, doubled as student IDs and meal plan funding or were marketed as the only way to receive or expedite financial aid refunds. Sometimes, these partnerships resulted in students being pushed into accounts that didn’t offer them the best terms and conditions.

The new rules are designed help families feel free to choose alternative financial products when getting ready for college by requiring that schools, among other things, provide students with a neutral list of account options for receiving financial aid refunds, make it clear that the aid can be deposited to pre-existing bank accounts and ensure that electronic payments made to pre-existing accounts are as timely as, and no more onerous than, payments made to accounts with partnering financial institutions. They were championed by consumer advocates calling for more student choice and transparency.

“High and variable back-end fees such as overdraft fees shroud the total cost of basic banking services at the very time students need a transparent, low-cost account,” Tom Feltner, director of financial services at the Consumer Federation of America, said in a press release. “Due to the Department of Education’s effective regulation, overdraft and confusing fees will be eliminated. This will ensure that much-needed financial resources go where they are most needed — to supporting a successful academic career.”

How to Choose a Student Debit Card

Accounts marketed by your college may be a good fit for families, but students should read the terms and conditions associated with each account closely to be sure. You can also comparison shop for alternative cards, considering a card’s fee structure and whether you’ll have easy access to branches or ATMs while on campus.

Keep in mind, too, that debit cards don’t help you build credit (which you will likely need post-graduation in order to secure an auto loan or rent an apartment), so you may want to consider adding a student credit card to your payment arsenal as well. Good student credit cards typically offer favorable fee structures and low credit limits that keep you from spending more than you (or your parent) can afford. You can alternately consider getting added as an authorized user to your parent or guardian’s existing credit card account as a means of getting acquainted with credit. You can monitor your progress and learn more about credit scoring by obtaining your free annual credit reports from AnnualCreditReport.com or viewing your free credit report summary, updated every 14 days, from Credit.com.

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