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Colleges, banks soaking students?
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BY LIANA BAYNE
A recent report about universities’ banking partners is raising eyebrows at colleges that
encourage students to bank with a particular company.
The report released Wednesday from the U.S. Public Interest Research Group
Higher Education Fund found about 900 schools nationally that have deals with companies that pushcoerce students to register for debit card accounts, often accounts with excessive fees attached.
Most Virginia schools do not have a particular banking partner for students, though most do partner with companies to offer affinity credit cards for alumni.
The Bank of America is the partner of both the University of Mary Washington alumni association and the University of Virginia’s alumni association.
Mark Thaden, director of alumni relations at UMW, said the card takes about 1 percent or less than 1 percent of a user’s transaction in fees, which are given back to a UMW scholarship fund.
Tom Faulders, the president of U.Va.’s alumni association, said fees generated by their card are shared equally among the university, the athletic department and the alumni association.
Thaden said the card was popular at its introduction because it had unique rates and features. Now, it isn’t as popular because people have more options, he said.
Thaden said the card was marketed prominently online and at various alumni events when it was introduced about 10 years ago, but now it is marketed only through a couple of mailings per year.
The U.Va. card is marketed through university publications for alumni. Faulders said it’s not marketed on campus.
Thaden said students almost never apply for the card, though he recalls being a student himself and seeing credit cards aggressively marketed on campus with promises of free T–shirts in exchange for signing up.
“Gone are those days,” he said.
The 2009 Credit Card Accountability Responsibility and Disclosure act prohibits anyone younger than 21 from openingto open a credit card account without parental consent. It also limits the extent to which credit card companies can market on college campuses. However, it doesn’t regulate debit or checking accounts.
While UMW and U.Va.’s model of marketing their financial partner only to alumni is the norm for most Virginia schools, others have fallen into “the campus debit card trap” described in the report.
One Virginia college with a financial partner that targets students is Liberty University. Liberty partners with the company Higher One, which the report heavily criticizes.
The report says Higher One contracts with schools to distribute all payments through the company by check, direct deposit or a OneAccount debit account. The company aggressively promotes the OneAccount, which about 2 million students nationwide use.
No one from Liberty was available on Thursday to talk about the school’s partnership. Most information about Higher One on Liberty’s website is behind a student log-in screen.
Liberty’s site states “all financial refunds released by the University are sent to Higher One[,] … the administrator of the optional OneAccount … The account is automatically opened if the student chooses ‘Easy Refund.’”
Higher One’s website states students are charged a $5.95 monthly fee if they don’t make 30 debit purchases per month. And they’re charged 50 cents every time they enter their PIN.
They’re also charged $2.50 if they use any ATM other than the four Higher One locations on Liberty’s campus, one of which is currently listed as being “out of service.”
Higher One makes about 80 percent of its revenue from account fees, the report says.
Higher One’s customer service Twitter account, @AskHigherOne, is peppered with apologies from Higher One employees to students angry about fees on their accounts.
The report also cites complaints about Higher One. Multiple states have investigated the company’s practices. In April, the U.S. Department of Education expressed concerns that some of Higher One’s practices and fees violate federal rules.
To read the report, go to uspirg.org/reports/usp/campus-debit-card-trap.
Liana Bayne: 540/374-5444