Revealed: How Banks Skim Millions From Student Aid Using Debit-Card-Linked Student IDs

Common Dreams:

Over 9 million students are at risk for increased educational debt, due to bank-affiliated campus debit cards that come with high fees, insufficient consumer protections, and few options. Financial institutions now have affinity partnerships with almost 900 campuses nationwide, grafting bank products onto student IDs and other campus cards to become the primary recipient of billions in federal financial aid to distribute to students.

"Campus debit cards are wolves in sheep's clothing," observed Rich Williams, U.S. PIRG Higher Education Advocate and report co-author. "Students think they can access their dollars freely, but instead their aid is being eaten up in fees."

The Campus Debit Card Trap, a new report released by the U.S. Public Interest Research Group Education Fund, finds that banks and financial firms now control or influence federal financial aid disbursement to over 9 million students by linking checking accounts and prepaid debit cards to student IDs. For decades, students would receive their aid by check, without being charged any fees to access their student aid. Now, students end up paying big fees on their student aid, including per-swipe fees of $0.50, inactivity fees of $10 or more after 6 months, overdraft fees of up to $38 and plenty more. Financial institutions aggressively market or default students into their bank accounts to maximize these fees.

Posted by Jim Zellmer at June 2, 2012 2:30 AM
Subscribe to this site via RSS/Atom: Newsletter signup | Send us your ideas