Banks Stack Fees On Students, With College Consent
Everybody knows the perils of credit card scams that try to lure young college students into debt on campus. But what you might not know is that many colleges are also in on the scams. According to the Associated Press, there are as many as 900 colleges opting to use credit card companies to handle student financial aid money. These payment cards come with heavy fees that benefit both the college and the bank sometimes through secretive deals. A report obtained by the AP reveals that these financial gains are sometime even in violation of federal law.
“They sold it as a faster, cheaper way for the college to get students their money,” Parker-Milligan, the student body president at Lane Community College in Eugene, Oregon said to MSNBC. “It may be cheaper for the college, but it’s not cheaper for the students.”
Higher One is one of those companies accused of baiting students into debt. The company has agreements with 520 campuses that enroll over 5.3 million students, that’s one-fifth of the entire enrolled student population. The report also shows that combined, Wells Fargo and US Bank have deals with schools that enroll 3.7 million students. Higher One charges fees $50 for an account that is overdrawn more than 45 days, $10 per month if the account remains inactive for six months, $29038 for overdrawing with a recurring bill payment and 50 cents each time a PIN is used instead of a signature at a store.
In response, the company’s Chief Operating Officer Miles Lasate says that Higher One is, “committed to providing good value accounts that are designed for college students.”
Despite the company’s claim of good intentions, these fees are adding up to the mountain of debt many students already face from loans. According to the Consumer Financial Protection Bureau, U.S. student debt has reached $1 trillion.