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March 23, 2011 10:00 AM The Refund Bank Account

By Daniel Luzer

Gigantic student loan company Sallie Mae announced Monday that students receiving its loans can now get refunds the same day the school generates such refunds. According to a recent press release by the company:

Schools faced with the challenge of rapid refund disbursement to thousands of students each semester now have a new option that can save them and their students money. Using innovative new technology, this streamlined process for schools and for students is the lowest cost option on the market, easy to use and ensures near-immediate access to their refunds.

The catch? Well, it turns out that in order to receive their own refunds promptly students have to sign up for Sallie Mae Bank’s “Sallie Mae No-Fee Student Checking account with Debit MasterCard.”

Technically new federal financial aid regulations require colleges to return refunds to students within seven days, no matter what back account students have. Colleges used to have two weeks to issue refunds.

Financial services company Higher One offers a similar deal to its customers, though students complain the company’s fees are too high and they feel inappropriately pressured to sign up for the account in order to manage their own money.

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer