Loan Program Plans to Offer Students Prepaid Bank Cards<br />“In the absence of strict oversight and safeguards,” they wrote, “these card programs can leave students and taxpayers vulnerable to exploitation.”<br />And while the solicitation from the Office of Federal Student Aid, known as F. S.A., lays out several restrictions for the financial services providers<br />that will ultimately run the program, it also explicitly states how they stand to benefit: The payment card, the document reads, “will be the first step in exploring a new, meaningful way to build a stronger, lifetime relationship with F. S.A.’s customers.”<br />That language set off alarms for consumer advocates, who said the department was offering banks<br />and card issuers an opportunity to lure in customers while they were young, while pushing the boundaries of what a federal student aid office should be.<br />The department said students at schools in the program would still be able to receive their money through existing methods — paper checks<br />and direct deposit into their bank account or onto another prepaid card — if their schools offered those options<br />The card, for instance, would be a feature within the myStudentAid mobile app, which would allow students<br />and their parents to complete federal aid applications from a phone and gain access to information about their loans, among other things, according to the document, which was prepared to solicit bids from banks and financial services providers.<br />Dr. Johnson — a former chief executive officer of First Performance, a card payments company — said students wouldn’t<br />be asked to provide a one-time blanket permission to be sent solicitations, but instead would be asked case by case.<br />The Office of Federal Student Aid — the arm of the Education Department<br />that oversees more than $1.3 trillion in student loans — said it expected to introduce the pilot program as early as late spring.
