What Is a Student Savings Account?

Young woman talks about student loan with loan officer
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DEFINITION

A student savings account is a bank account designed specifically for teens and college students. Student savings accounts often come with more flexible terms such as low minimum balance requirements and some fees may be limited or waived. 

How a Student Savings Account Works 

A student savings account is designed to help teens and college students start saving money. Students can begin earning interest on the money they save, and they can add their parents to the account. 

These accounts usually come with limited fees but still have many of the same features as regular savings accounts. College students may be able to set up a direct deposit for their student loans if there’s money left over after their tuition and fees are paid for.

When you set up a direct deposit for your student loans, you’ll receive the money much quicker than if you wait for the school to mail you a check.  

Example of a Student Savings Account

Opening a student savings account works a lot like establishing any other bank account: You either visit the bank in person or apply for an account online. Make sure you have the necessary paperwork before you get started—for instance, you’ll need at least two forms of ID. You could use your driver’s license and Social Security card to verify your identity.

Banks don’t typically check the credit score of potential account holders, but they will likely screen your banking history. Don’t worry, this won’t impact your credit score. 

Most accounts will require you to deposit a minimum amount of money to open the account. This minimum deposit could be anywhere from $25 to $100. This is one difference between a savings account specifically designed for college students and a regular account: Some banks require much larger minimum deposits to open a standard savings account.

From there, you’ll have to fill out the necessary paperwork to open the account. At the very least, the bank will ask for your name, date of birth, address, phone number, and social security or ID number. Once you fund the account with the minimum deposit, your savings account will be active. 

Make sure to find out if the bank charges any fees you need to know about. And you should find out if there are any fee-free ATMs near your work or school.

At the end of the month, your bank will send you an account statement. Make sure you regularly open and review these statements to check your spending and watch out for any suspicious transactions.

Benefits of a Student Savings Account

Pros

  • Helps teens and college students learn how to manage their money
  • May allow access to additional financial resources
  • Gives them the experience they need to become financially independent

Pros Explained

  • Learn to manage money: Opening a savings account helps students learn how to save and manage their money. 
  • Access to additional resources: Many banks will offer additional services for teens and college students, like help with budgeting or setting financial goals. 
  • Gain financial independence: When teens and college students understand how to set financial goals, budget, and save for the things they want, they gain the skills necessary to be financially independent adults.

Student Savings Account vs. Student Checking Account

Many banks offer both student savings and checking accounts with special perks for members under a certain age. Financial institutions recognize the opportunity of establishing a relationship with a young person just beginning their financial life, which is why many offer promotions and perks catered to students.

 Student Checking Account  Student Savings Account
No monthly maintenance fee for members under age 24 Low minimum balance requirement
May offer promotions for qualified new members Waived overdraft protection fees
A linked and secure debit card provides easy access to funds Keeps savings (including excess student loan funds) secure while earning interest

It's likely you'll simultaneously open a student savings and checking account. A student checking account provides many of the same perks as a student savings account and ensures you'll have easy access to your funds via the use of a debit card.

Key Takeaways

  • A student savings account is a bank account designed to help teens and college students start saving money.
  • A student savings account can help students learn how to manage their money and gain financial independence. 
  • Students can open an account at an online or a traditional bank—the main difference between the two is that traditional banks have branch locations.

Frequently Asked Questions

What are the best student savings accounts?

There are many great options for student-centered bank accounts. Bank of America, for example, offers a wide range of bank account options for both college and high school students with no fees while in school and under age 25, no minimum balance, and access to nationwide ATMs.

What is the difference between a student savings account and a regular account?

A student savings account has all the capabilities of a regular savings account. The main feature of a student savings account is that it offers little or no monthly maintenance or overdraft fees to college students below a specific age, typically 24 years. Student savings accounts also usually require a lower minimum balance to open.

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Article Sources

  1.   Consumer Financial Protection Bureau. “Student Banking: Getting Started.”

  2.  Bank of America. “Student Banking.”