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Published: May 2012

Students caught between banks and universities

U.S. Public Interest Research Group (US PIRG) has released a report that explores the relationship between banks and universities, including how partnerships between the two to provide student aid disbursements or student ID cards may end up costing students.

Download the report entitled "The Campus Debit Card Trap"

Below is an excerpt from US PIRG's new release about the report:

Banks and other financial firms are taking advantage of a variety of opportunities to form partnerships with colleges and universities to produce campus student ID cards and to offer student aid disbursements on debit or prepaid cards. In addition to on-campus services, such as student ID functions offered on the card, some cards offer traditional debit card services linked to bank accounts; other cards provide additional reloadable prepaid card functions. The disbursement of financial aid and university refunds is the most significant partnership identified.

While schools are obtaining revenues and reducing costs by outsourcing certain services, the relationships between schools and financial institutions have raised questions because students end up bearing some costs directly – including per-swipe fees, inactivity fees, overdraft fees and more. Other issues include the effect of aggressive marketing strategies by partnering companies on student choice and weaker consumer protections on certain cards that hold student aid funds.

Key findings include:

• U.S. PIRG has identified almost 900 card partnerships between colleges and banks or other financial firms at schools with over 9 million students, or over 2 in 5 (42%) of all students nationwide.
• Industry leading banks and financial firms tout that upwards of 70%-80% of students use their cards after a few years of marketing.
• U.S. PIRG has identified that 32 of the 50 largest public 4-year universities, 26 of the largest 50 community colleges, and 6 of the largest 20 private not-for-profit schools had debit or prepaid card contracts with a bank or a financial firm.

For More Information

Read more about the report

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Category

Banking   ♦   Consumer Protection   ♦   Credit Cards   ♦