<p>Those of you looking at Ally and any of the other banks that reimburse ATM fees. That is not the same as free use of the ATM; there are tax consequences. When you get your tax forms in the mail, you will get a 1099-INT form covering the amount of fees that were reimbursed, and that money is taxable. That means if your student (or you if you are the primary account holder on a joint account) already has enough income to owe taxes, it will be taxable. It also means it will show up on your FAFSA the following year as income - and will cause a 50% hit toward EFC.</p>
<p>It still might be the best option in a rural area with few ATMs, but your students should still look for the cheapest ATM. Those $200 in ATM fees over the course of the year will result in $20 income tax, plus $100 increase to EFC - hardly free!</p>