U.S. PIRG recently released an in-depth report, “The Campus Debit Card Trap,” on banks and companies who are in the business of disbursing federal student aid money on debit and prepaid cards. They looked at nearly 900 card partnerships between colleges and banks and financial firms which impacts over 9 million students, or over 2 in 5 (42%) of all students nationwide.
Some of their findings after looking at
- Industry leading banks and financial firms tout that upwards of 70%-80% of students use their cards after a few years of marketing.
- Fees can be steep and frequent for students using the university-adopted cards, including a variety of per-swipe fees, inactivity fees, overdraft fees, ATM fees and fees to reload prepaid cards.
- Access to student financial aid funds placed on debit cards can be subject to limited availability of “convenient” fee-free ATMs for student loan withdrawals despite U.S. of Education rules. Students end up paying fees to access their aid.
- Of banks, US Bank had the most card agreements, at 52 campuses with over 1.7 million students. Wells Fargo had card agreements at schools with the most students; its contracts were at 43 campuses that have over 2 million students.
- The largest financial firm player, Higher One, has card agreements with 520 campuses that enroll over 4.3 million students.
Have you used one of these products? How was your experience?