In recent years banks have partnered with colleges to provide students with debit cards. These debit cards allow colleges to ensure easy and smooth transactions with students. However, students might find that the transaction fees are little more than they would choose to pay.
On Sept. 18, U.S. Public Interest Research Group, PIRG for short, held a national student news teleconference to share its findings from a report that examined whether students got a fair deal when banks partnered with colleges to give students debit cards.
Three presenters’ Rich Williams, Higher Education Advocate with U.S. PIRG, Anne Johnson, Director of Campus Progress, and Rohit Chopra, Private Student Loan Ombudsman with the Consumer Financial Protection Bureau gave reporters a breakdown of the sort of problems found when colleges partnered with banks.
“Nine-million students are potentially at risk for increased educational debt due to bank-affiliated campus debit cards that come with high fees, insufficient consumer protection and few options,” Williams said.
According to PIRG there are 900 campuses nation wide “grafting bank products onto student IDs and other campus cards” to ensure banks receive a healthy profit.
RSC is partnered with Higher One financial services, and according to the F.A.Q. handout available in SSB room 200, three college students started the company in 2000 to provide students with a better way to receive and manage money. The card allows the college to give students refunds.
Williams also referred to colleges as a gateway for financial savvy banks to take advantage of the younger generation by giving students cards issued by colleges.
“Students think they are getting a fair deal and unbiased advice when they see a college logo on these cards, when in reality colleges are getting financial perks while students are getting stuck with high bank fees,” Williams said.
According, the U.S. PIRG report there are currently 32 of the 50 largest public 4-year universities, 26 of the largest 50 community colleges, and 6 of the largest 20 private not-for-profit schools have debit or prepaid card contracts with a bank or a financial firm.
Eighty percent of Higher Ones revenue is made through siphoning fees from student aid disbursement cards. Based off of SEC filings that is a total of $142.5 million of its $176.3 million total revenues.
In part two of this article there will be tips on how to avoid what U.S. PIRG calls the “The Campus Debit Card Trap”.