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Fast refunds for college students, with no overdraft fees

Nelnet is offering preloaded debit cards as an option for university tuition refunds

Tuition refunds require intense administrative attention at many colleges and universities. If a student receives financial aid after tuition has been paid, or if he or she drops a course early in the term, schools are obligated by federal law to issue refunds within 14 days. For years, refunds were issued through paper checks, which required a lot of work in the bursar's office and for students who lacked access to a bank account, direct deposit via ACH was not an option.

Nelnet, an education planning and finance company based in Lincoln, Neb., has devised a simpler solution: preloaded debit cards. Similar cards have been used for consumer rebates for years, particularly in the telecommunications and financial services industries.


Refunds are not an inconsequential issue for schools. The average refund amount is approximately $2,000, according to Kevin Wiley, Nelnet's chief operating officer. Students who are eligible for refunds average 2.5 refunds a year, so the total annual amount per student can reach approximately $5,000.

"In the last few years, the debit card has become a real opportunity in the market to get refunds in a simpler way," said Wiley. There are significant advantages to prepaid debit cards. Some of Nelnet's competitors offer a refund debit card linked to a checking account, but that can result in overdraft fees once the money is spent, Wiley said.

Nelnet is partnering with Citi Prepaid Services on the debit cards, so they can be used to withdraw cash at the bank's branch locations and network of 26,000 ATMs. Citi cash machines can also be installed on college campuses where necessary. Perhaps most importantly, the relationship with Citi means that the debit card funds are insured up to $250,000 by the FDIC.

"Our whole business is through electronic delivery of payment," said Doug Haines, a Citi spokesman. "We really round out Nelnet's offering."

"In the last few years, the debit card has become a real opportunity in the market to get refunds in a simpler way."

Kevin Wiley

Chief Operating Officer

Wiley agreed: "Citi was by far the easiest to work with. They understand preloaded debit."

The prepaid cards can be co-branded, featuring a college's distinctive logo and school colors. Students can set up on-demand text message alerts to show the card's current balance, last payment, and other information.

The card can be reloaded if another refund is issued. Some administrative fees will be charged to the school to service the cards, but those are in line with industry standards, according to Nelnet. Wiley said he expects the preloaded debit cards to be embraced by schools and students. Of course, Nelnet will still offer direct deposit and paper check options as part of its student refund services, which are gaining traction with colleges.

"I think the marketplace is ready," Wiley said. "Schools realize they need to partner in the fulfillment of the refund process and they're looking for a better solution. A preloaded debit card with no overdraft fees and 26,000 ATMs to access cash for free is a smart option and good for students too."

Nelnet is just starting to inform colleges and universities about its preloaded debit cards.

"This is a new product that offers another valuable option for schools and students," said Bo Abresch, director of marketing and brand strategy for Nelnet Business Solutions. "Most young people today are familiar and comfortable with preloaded debit cards, and we think a preloaded debit card for tuition refunds will emerge as the most convenient and safest choice for many students."

For more information about Nelnet's student refund solutions, visit

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