One easy way to make college cost more than it needs to is to choose the wrong bank account and pay exorbitant fees as a result. Many schools partner with a financial institution to handle excess financial aid dollars (what’s left to pay for other educational costs such as room and board or books, after the school deducts tuition and fees) and encourage students to open accounts at these institutions. Often, these accounts have fees or other charges that make them more costly to the student than would a normal bank account. The New York Times has a helpful overview of these accounts here. And the Consumer Financial Protection Bureau has more information on choosing a good bank account while in college, here.
When considering the options available on a bank account, it’s important for parents to guide students to the best account for the student. Consider not just whether the bank has ATMs that are convenient for the student, but how students manage finances. For example, young adults transact more via mobile apps than do other age groups, so free mobile banking features should be part of the account’s options. And, according to the FDIC, young adults (age 18-25) are about 50% more likely to have overdraft activity than are all adults– almost half of accounts held by young adults had NSF overdraft activity, and about 15% had more than 10 overdrafts annually.