900 Colleges Forcing Students into Bank Deals with Hefty Fees
Almost 900 colleges are pushing students into using fee-heavy payment cards, according to a new study. Some universities even make it mandatory in order to receive financial aid.
The report was conducted by the U.S. Public Interest Research Group Higher Education Fund. It found that all over the country, colleges are striking deals with banks to handle student financial aid. More than two out of five American college students attend schools that have such deals, the Associated Press reports.
The extra fees from these private lending groups can get pretty exorbitant. So why are some universities letting this happen?
Money. Why else?
The study discovered that lenders, such as Wells Fargo and US Bank, paid many schools large sums for the opportunity to take over an institution's student aid program. For instance, Ohio State University will receive $25 million under its contract with Huntington Bank.
Many of these colleges also receive a cut of the fees charged to students who use their school's financial aid debit cards. One lender, Higher One, assessed students $50 for accounts overdrawn for more than 45 days. It also charged $10 per month for accounts inactive for six months and 50 cents for PIN transactions, among a slew of other charges.
Such fees aren't just happening at a few institutions either. Higher One, for example, has deals with 520 schools. Meaning potentially about a fifth (4.3 million) of the nation's college student population could be subject to these charges.
However, some schools blame the lack of public funding for the wave of college bank deals. They argue this has caused many universities and students to look for alternative ways to fund higher education.
In terms of legality, it's uncertain how many, if any, of the college-bank contracts violate federal or state laws. That's because many universities haven't released their written agreements to the public. For now, the best advice to students is to read their financial aid contracts closely and take note of any potential fees.
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