Welch de­mands end to large bank fees on stu­dent debit and pre­paid cards

US PIRG re­port re­veals that banks are in­creas­ingly charg­ing stu­dents for ac­cess to their fed­eral fi­nan­cial aid

Stanstead Journal - - NEWS - Burling­ton, VT

Rep.Peter Welch is call­ing for an end to rip-off debit and pre­paid card fees be­ing charged by big banks to some col­lege stu­dents in order to ac­cess their fed­eral stu­dent loans.

Ac­cord­ing to a re­port re­leased last week by the U.S. Pub­lic In­ter­est Re­search Group (U.S. PIRG) Ed­u­ca­tion Fund, banks and fi­nan­cial firms have struck deals with col­leges and uni­ver­si­ties through­out the coun­try, al­low­ing them to link check­ing ac­counts to stu­dent IDs. This gives the banks con­trol or in­flu­ence over fed­eral fi­nan­cial aid dis­burse­ments to over nine mil­lion stu­dents. Tra­di­tion­ally, stu­dents would re­ceive their aid by check, with­out be­ing charged any fees to ac­cess their stu­dent aid. Now, stu­dent aid is in­creas­ingly be­ing dis­persed via th­ese cam­pus card pro­grams, which many stu­dents are en­rolled in by de­fault. Th­ese pro­grams end up charg­ing stu­dents fees on their stu­dent aid, in­clud­ing per-swipe fees of $0.50, in­ac­tiv­ity fees of $10 or more af­ter 6 months and over­draft fees of up to $38.

In a let­ter to 15 ma­jor fi­nan­cial in­sti­tu­tions, Welch – along with As­sis­tant Se­nate Ma­jor­ity Leader Dick Durbin (D-Ill.) and Sen. Jack Reed (D-R.I.) – pointed out that the cam­pus card fees of­ten cut into stu­dents’ tax­payer-sub­si­dized fed­eral stu­dent fi­nan­cial aid. Welch, Durbin and Reed are de­mand­ing an end to the fees and are call­ing for the pub­lic re­lease of se­cret debit or pre­paid card con­tracts be­tween banks and in­sti­tu­tions of higher ed­u­ca­tion.

“For big banks to use strug­gling stu­dents - many of whom are al­ready sad­dled with high stu­dent loan debt - as profit cen­ters to pad their bot­tom lines is way out of line,” Welch said. “They are ef­fec­tively skim­ming prof­its from the same tax­pay­ers who bailed them out in 2008. It’s wrong and it has to stop.”

Ac­cord­ing to U.S. PIRG, nearly 900 col­leges par­tic­i­pat­ing in the fed­eral fi­nan­cial aid pro­gram now have such cam­pus card part­ner­ships with banks, in­clud­ing 32 of the 50 largest pub­lic four-year uni­ver­si­ties and 26 of the 50 largest com­mu­nity col­leges. Higher One, the big­gest firm in the busi­ness, col­lects nearly $143 mil­lion by si­phon­ing stu­dent aid, ac­count­ing for 80 per­cent of its rev­enue.

Welch, Durbin and Reed sent let­ters to the fol­low­ing fif­teen fi­nan­cial in­sti­tu­tions which were named in U.S. PIRG’s re­port as lead­ing providers of cam­pus debit and pre­paid cards, ask­ing each in­sti­tu­tion to pro­vide in­for­ma­tion about their cam­pus card fees and con­tracts within two weeks: Amer­i­can Ex­press, Black­board, Com­merce Bank, ECSI, Higher One, Heart­land Pay­ment Sys­tems, Hunt­ing­ton, Nel­net, PNC Bank, Sal­lie Mae, SunTrust, TCF Bank, TouchNet, US Bank and Wells Fargo.

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