Campus cash cards: Financial aid tool or money trap?

Colleges and universities across America have taken to using campus cash programs to dispurse financial aid -- reasoning campus cash programs allow for students to get their funds faster and easier. If a campus cash card gets stolen or lost, it can easily be replaced.

These campus cash cards can be used to purchase food, clothing, electronics, books, and school supplies, depending on that college's campus cash policy and merchants incorporated in that program.

New York University's campus cash program requires students to take "credit bearing courses" and students (or relatives) can top up their cards online, but they have to pay a $2 fee every time they do so. That's more than the cost of most banking fees, but if you want to avoid that fee, you have to go to their bursar office -- a fun time for any student. Or students can add cash to their cards at "Value Transfer Stations." The NYU campus cash card allows students to make purchases with their campus cash card at selected vendors in downtown Manhattan.

While the extensive list of merchants a student can use their NYU card at doesn't appear to favor one vendor over the other, I wonder what the vendors get out of this deal. By having these campus cash cards, students are more inclined to spend their money at the listed merchants and through their endorsement, colleges now in effect subsidize local businesses.

Oddly, the University of Oregon's campus cash card cannot be used at its residential dining halls, but their card program is accepted at nearby vendors. Campus food in general is overpriced and bland, so it is reasonable to frequent a local establishment every once in a while. Notice how you must have a campus cash card at University of Oregon in order to use any of the university's printing or copying machines, so having some money on this additional card is inevitable.

NYU's campus cash program does not require you to have an additional card; instead it utilizes the NYU identification card. Colby College's ColbyCard ID also acts like a campus debit card, but unlike NYU, Colby does not charge you a fee to add money on your account via the Internet.

While the use of college IDs as debit cards makes things simpler for students, I don't see the immediate connection between these campus cash cards and financial aid. If anything, these cards encourage college students to borrow more money to add to their campus cash cards so they can dine out with their friends. Instead of saving money via grocery shopping and cooking, or hunting for book deals on Amazon, these campus cash programs mandate students spend their money where the university wants. And whether that represents a bargain demands something any college student can appreciate: some in-depth study.
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