PDT Staff Writer
Shawnee State University is one of 16 universities in Ohio that utilizes debit cards for financial aid, and with the fall round of federal financial aid checks being released this week, U.S. Sen. Sherrod Brown (D-OH) used a media conference call Wednesday to alert students to debit card fees that could cut into their money for tuition, housing, books, and other college costs.
Ohio’s students can now receive their financial aid disbursements on debit cards, but a new report shows that hidden fees and penalties could cut into the already-limited financial aid dollars.
“It’s unconscionable that an out-of-state financial institution is siphoning off students’ critical financial aid to pad their bottom line,” Brown said. “Too many students have been slammed with hidden fees and penalties that cut into their already-limited financial aid dollars. That’s why I’m fighting for the reforms we made on credit cards to apply to debit cards, particularly those storing student financial aid. Students shouldn’t have to watch their federal aid dollars go to debit card companies.”
Shawnee State administrators are aware of the situation and provide multiple options for students utilizing financial aid.
“We are sensitive to student fees and provide students with three options for receiving their financial aid refunds here at Shawnee State,” Elizabeth Blevins, SSU Director of Communications, said. “Students may choose between receiving a refund check that is mailed to their home, having their refund direct deposited into their existing banking account, or having their refund direct deposited in to a checking account provided through Higher One, the company that we have contracted with to administer the processing of our student refunds.”
Until last year, Shawnee State University processed all financial aid refunds as checks that were mailed to students. The student demand for faster electronic options, instead of the mailed paper checks, prompted the university to seek other options.
“We want students to have choices and to make informed decisions about those choices,” Blevins said. “Through new student orientation and our Student Business Center, we inform students of the refund options available to them and caution them about fees that may be associated with their selected banking choices.”
On Wednesday, Brown released a letter to Higher One, the largest issuer of debit cards for student financial aid. Brown said this out-of-state financial institution—which has card agreements with 4.3 million students at 520 campuses, including 7 Ohio institutions—made 80 percent of its revenues last year by what Brown termed “siphoning fees from student aid disbursement cards, totaling $142.5 million in 2011.” Brown said Higher One was recently fined $11 million by the FDIC for overcharging students. In a letter to Higher One Wednesday, Brown called on that company to “follow the same rules for disclosing terms of the card to students as they do credit card holders.” He told them that would ensure that students receive clear, easy-to-read information on the terms of the card and fees associated with it’s use.
Brown, who chairs the Senate Banking Subcommittee on Financial Institutions and Consumer Protection, was an original cosponsor of the Credit Card Accountability Responsibility and Disclosure (CARD) Act – a law he helped pass that went into effect in early 2010. Brown said the CARD Act, which applies only to credit cards, is aimed at protecting American consumers from excessive debt and deceptive and predatory credit card practices. Brown went on to say it increases transparency in the credit card industry by requiring enhanced disclosure of contract terms while improving billing and marketing practices. The law also curtails fees and penalties on cardholders, protects consumers from random at-will interest rate increases, and requires credit card companies to mail bills 21 days in advance instead of 14.
Brown is calling on issuers of debit cards used for financial aid to voluntarily adopt improving fees and disclosures, requirements that penalty fees be reasonable and a prohibition against inactivity fees, restricting the use of tangible gifts to college students on or near campus or at campus-sponsored events in exchange for using debit card services, publicly disclosing all contracts between banks, firms, and schools and submitting an annual report to the Consumer Financial Protection Bureau and Department of Education including the terms and conditions of all promotional agreements with colleges.
Specifically, The Consumer Financial Protection Bureau recommends that students know the following:
You can’t be required to use a specific bank or card. There may be a financial institution that operates on your campus, but you generally can’t be required to use a specific account or card to access your student aid. If you have received a federal student loan, your school must provide a paper check or cash option. Consider choosing an account before arriving at school. Shop around, and don’t feel limited by the banks operating ATMs on or near campus. Some financial institutions don’t charge you for using any ATMs, and some will automatically reimburse you for fees charged for using an out-of-network ATM. Many institutions also provide a mobile phone app to remotely deposit paper checks. Sign up for direct deposit as soon as possible. Using direct deposit allows students to access their funds more quickly.
Frank Lewis may be reached at 740-353-3101, ext. 232, or at firstname.lastname@example.org