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Close to
half of California’s community colleges and numerous other colleges and
universities are now disbursing financial aid through debit cards contracted
through Higher One, the Bay
Citizen reports. According to the U.S. PIRG
Education Fund, Higher One is the largest player of its kind in the U.S.,
with 520 partner campuses, enrolling over 4.3 million students nationwide.
Not only do
students have to pay fees in order to access their financial aid, but Higher
One has been accused of charging multiple fees, aggressively marketing their
products and violating customers’ privacy. Earlier in the year, Ventura College
student Sherry McFall filed a class-action lawsuit against Higher
One, accusing them of creating bank accounts for students without their
consent. The suit also claimed they improperly disclosed fees.
Traditionally,
students would receive a financial aid check which they would deposit in their
bank. They could then write checks against those funds or withdraw cash, as
needed, to pay for food, rent, books or other expenses.
With the
Higher One debit cards, students can still do this, but only after transferring
the funds to another bank account. It is much easier to simply use the card as
a debit card, which many do, especially after being bombarded with
advertisements from the company telling them this is the fastest and easiest
way to access their money.
Once they
start using their cards, Higher One has numerous ways to skim off portions of
their financial aid. For example, there are several fees that are charged upon
activation of the card, as well as 50 cent transaction fees each time the card
is used to make a purchase, according to the Bay Citizen report. Furthermore,
if students use an ATM that does not belong to Higher One, they also get charged
$2.50 by Higher One, plus whatever fees are charged by the ATM. And if they do
not use their account for six months of longer, they are assessed a $10 month
fee.
While Higher
One says it will vigorously fight the lawsuit, it admits in its own annual
report that persuading students to activate a Higher One account is part of its
sales efforts. Furthermore, in an interview in the New Haven
(Conn.) Independent, Higher One President, Miles Lasater, said that half of its
revenues ($88 million in 2011) come from additional fees.
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