Michelle Singletary discusses a new report from U.S. PIRG, "The Campus Debit Card Trap." Read the report's key findings after the jump:
- 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.
- Of banks, US Bank had the most card agreements, at 52 campuses with over 1.7 million students. Wells Fargo had card agreements at schools with the most students; its contracts were at 43 campuses that have over 2 million students.
- The largest financial firm player, Higher One, has card agreements with 520 campuses that enroll over 4.3 million students.
- Although contracts are hard to obtain, revenues to schools can be substantial. A new contract between Ohio State University and Huntington Bank includes $25 million in payments to the school over 15 years. It also includes an additional $100 million in lending and investment to neighborhoods surrounding campus.
- Fees can be steep and frequent for students using the university-adopted cards, including a variety of per-swipe fees, inactivity fees, overdraft fees, ATM fees and fees to reload prepaid cards.
- At least one fee listed on Higher One’s fee schedule would violate U.S. Department of Education rules if charged, other fees may violate other rules.
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