Do College Students Get Blinded by Quick Cash to Pay Higher Fees?

While check cashing services can be convenient for college students who receive tuition refund checks, the cons could outweigh any benefits.

A recent study has shown that 80% of respondents are satisfied with their current level of service. “The Assessment of Unbanked U.S. College Students and Use of Nontraditional Banking Products,”One reason check cashing services are so popular among college students is the fact that 3 million American college student don’t have any savings or checking accounts. 20 percent of college students also avoid cash checks and the banking system.

“Often, these students turn to check cashing services to generate cash when they need it — especially when large tuition refund checks arrive,”Mary Johnson is a Financial Literacy Expert at Higher One. “However, what they fail to realize is the considerable fees check cashing services charge and how unsafe it is to carry large amounts of cash.”

Check cashing services often charge high fees that students may not be aware of until it is too late. Sometimes, as much as 6 percent. These fees can be particularly high if the check covers a large amount such as student financial aid checks.

According to(*) (Higher One), a company that partners with colleges to reduce the use of paper checks by distributing financial aid electronically to students’ bank accounts, the average financial aid check is more than $1,400 — that’s a lot of cash to carry around. However, many students opt to manage large amounts without having to go through a bank. The study found that 646,000 college students who received financial aid reported that they cashed checks outside of banks through check cashing services or similar businesses that can charge high fees.www.higherone.comJohnson.

“Financial aid dollars may be the first time students have access to large sums of money,”No matter the reason students aren’t using bank accounts, smart money management is possible with them. Transaction records allow you to track spending and keep track. Johnson notes that it is important to inform students about bank accounts. They can be as fast and as convenient as check cashing services, but are safer thanks to FDIC insurance and fraud protection.”Non-traditional students may have had bad experiences with accounts in the past, and younger adults may not have had as much experience with banks.”