According to the PayPal website, the final functionality on their student accounts ends on September 22, 2018. However, since they stopped parents from paying back in April and transferred any outstanding balances to the parent account at the same time, these accounts have been dead for a long while. So, is PayPal still relevant for students and what are the alternatives for managing your money in high school and college?
More Than Just Pocket Money
Teen spending is a big-time market in the United States and much more than just a way of managing an allowance of a few dollars. It is estimated that U.S. teens spend $172 billion per year between them. At the other end of the scale, this includes college costs like food, accommodations, leisure and socializing as well as the occasional book or two. Still, despite the startling figure they have to spend between them, with virtually no experience in managing money in the real world, many teens still struggle. Financial problems are only one of the many issues that can ruin your freshman year at college.
The PayPal Student Account
In 2009, PayPal saw an opportunity to help with this situation, and hopefully, create loyal PayPal customers for life at the same time, and so, they created the PayPal Student Account. These innovative accounts ran for seven years and were aimed at helping parents to provide cash in a simple, straightforward way to their student childrenwhile at the same time,keeping an eye on spending. Unfortunately, their simplicity and extra features, such as money management tools aimed at teaching students how to control their finances, were outweighed by significant fees. Students were charged 2.9 percent plus 30cents to receive money within the U.S. and 3.9 percentplus 30cents if the cash came from overseas. Add to that ATM charges of $1.50 and a $3 charge for bank withdrawals, and the cost of this convenience soon mounted up.
So, is PayPal still relevant for students?
That depends on the age. PayPal does not allow accounts for anyone under the age of 18, as they cannot enter into a legal contract in the U.S. However, PayPal can still be useful for older students. Once over the age of 18, students can receive money quickly and easily from their parents and pay safely and securely online without disclosing their private details. These days, PayPal can be used for almost anything online, from buying your groceries to buying your seat at the big game or even buying your place at the gaming tables. You can even apply for PayPal credit, which is like a card-free credit card account. However, these are stand-alone accounts and parents will have no control or oversight on how the money is spent and they don't provide easy access to your cash.
PayPal Money Pools
One significant advantage of PayPal for students is the new Money Pool feature. It allows groups to contribute to joint ventures without any single individual having to take responsibility for a significant amount of cash. Members can pay in what they like when they like, and with a clear record of all transactions, there is no room for disputes. It's ideal for that spring break adventure or that sports team trip.
What are the alternatives?
Now that the PayPal student account is gone, what are the alternatives for parents and their student offspring? Prepaid cards are one of the most popular ways to provide funds for students, both at home and when they are away at college. The advantage with these is that they do not need to be attached to a bank account and can be topped up at any time, but still, may be tied to a single store brand or supermarket. Many banks also offer prepaid debit cards, which are attached to the parent's account, yet have the student as an authorized user.
Alternatively, the major banks, such as Bank of America, Capital One and Chase, all offer student or teen bank accounts that provide some of the features of an adult account, although these usually need to be tied to the parent account as a guarantor. Many of these allow parental control of spending, which may seem harsh to the student, but will usually make the parent feel more willing to contribute funds.
Finding ways to financially support students at college while making sure that they manage their money effectively has always been an issue. The demise of the PayPal Student Account is an unfortunate backward step for all concerned. However, with a bit of digging around, there are still plenty of ways to find that balance between parental control and student freedom when it comes to finances.