What’s Up, Betsy? US Department of Education Makes Another Attempt to Limit Student Funding

The US Department of Education is testing the next-gen federal aid distribution program pilot. The new initiative is to distribute federal aid money onto prepaid debit cards. Obviously, for better control over the federal money. The draft program proposal claims this will help student loan borrowers spend their financial aid more efficiently. The pilot program will launch in February and include 100,000 students.

 

As of today, educational institutions receiving federal funding allocate it to students’ tuition bills. The rest of the money goes to students to be spent at their own discretion. The DeVos’ program entails that students would receive the funds on their debit cards. The draft program proposal indicates that this type of money distribution will help students “understand the financial implications of their [...] loan debt.”

 

Receiving Federal Student Aid on Debit Cards: What’s It All About?

 

Students eligible for financial aid will be able to receive “real-time, continuous counseling” using a mobile app. Using debit cards to allocate student financial aid will obviously impose limitations on how the money is spent. The draft indicates that specific types of products and services will be restricted under the program. Most likely, students won’t “have access to using the [third-party] physical card or mobile app.”

 

What is more, students will be informed about the long-term “ramification” of spending the allocated funds. All in all, this ‘new initiative’ is nothing other than the latest attempt to turn a wrench on federal funds distribution. And this is not the first time! In 2017, the US Department of Education reduced the amount of loan forgiveness for students who were defrauded by their colleges.  

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