This is the sort of outrageous crap that is wrong with our economy. Our economy will never get better as long as this sort of sleaze is allowed to continue.
This story was grabbed from the L.A. Times
Colleges' bank deals saddle students with big debit-card fees
May 30, 2012, 1:38 p.m.
As many as 900 colleges are pushing students into using payment cards that carry hefty costs, sometimes even to get to their financial aid money, according to a report released Wednesday by a public interest group.
Colleges and banks rake in millions from the fees, often through secretive deals and sometimes in apparent violation of federal law, according to the report, an early copy of which was obtained by the Associated Press.
More than 2 in 5 U.S. higher-education students — more than 9 million people — attend schools that have deals with financial companies, says the report, written by the U.S. Public Interest Research Group's Education Fund.
"For decades, student aid was distributed without fees," said Rich Williams, the report's lead author. "Now bank middlemen are making out like bandits using campus cards to siphon off millions of student aid dollars."
Financial companies such as Higher One shift the cost of handing out financial aid money from universities, which no longer have to print and mail checks, to fee-paying students, Williams said.
The fees add to the mountain of debt many students already take on to get a degree. U.S. student debt tops $1 trillion, according to the Consumer Financial Protection Bureau.
Student loans have surpassed credit cards as the biggest source of unsecured debt in America, according to the bureau, which regulates credit cards and private student lenders.
It took Mario Parker-Milligan less than a semester to decide that he was paying too many fees to Higher One, the company hired by his college to pay out students' financial aid on debit cards.
Four years after he opted out, his classmates still face more than a dozen fees — for replacement cards, for using the cards as all-purpose debit cards, for using an ATM other than the two on-campus kiosks owned by Higher One.
"They sold it as a faster, cheaper way for the college to get students their money," said Parker-Milligan, 23, student body president at Lane Community College in Eugene, Ore. "It may be cheaper for the college, but it's not cheaper for the students."
Among the fees charged by Higher One, according to its website, is a $50 "lack of documentation fee" for students who fail to submit certain paperwork. The U.S. Education Department called the charging of such fees "unallowable" in guidance to financial aid officers issued last month.
Higher One founder and Chief Operations Officer Miles Lasater said the company takes compliance with the government's rules "very seriously" and officially swears that to the government each year.
"We are committed to providing good value accounts that are designed for college students," he said, and students must review the company's fee list when they sign up for an account. He cited a study commissioned by Higher One that declared Higher One "a low-cost provider for this market." The same study found that the median fees charged to the 2 million students with Higher One accounts totaled $49 annually.
Among the fees charged to students who open Higher One accounts: $50 if an account is overdrawn for more than 45 days, $10 per month if the student stops using his or her account for six months, $29 to $38 for overdrawing an account with a recurring bill payment, and 50 cents to use a PIN instead of a signature system at a retail store.
Higher One has agreements with 520 campuses that enroll more than 4.3 million students, or about one-fifth of the students enrolled in college nationwide, according to public filings and the Public Interest Research Group report. Wells Fargo Bank and US Bank combined have deals with schools that enroll 3.7 million, the report says.