STUDENTS ACROSS THE COUNTRY ARE BEING INTRODUCED TO SOMETHING BRAND NEW THIS YEAR. Universities such as UMBC, University of North Dakota, Portland State University, Pace University and several others are all introducing a new age student ID/Debit Card.
What Makes this ID Any Different?
These new Frankenstein student ID’s are a hybrid of a university swipe card and a debit card. Sounds Harmless, right?What makes these cards predatory is the account from which the money is withdrawn. The charges from this unique monster of a card pull directly from your Student Financial Aid Reimbursement.
These cards, because of their strange hybrid nature are not subject to the sweeping reforms
that took effect this year and sought to curtail similar relationships between colleges and credit card issuers. And if you aren’t afraid yet these school officials say students must carry the cards because of the fact that they double as an ID.
Students are told that they do not have to activate their accounts. However on average, nearly half of students at each college sign up for the account At schools that have used the program for several years, the adoption rate is closer to 70 percent.
The business model has translated into booming sales for Connecticut-based Higher One. Its loan cards have yet to be widely adopted in the Washington area, but the company has signed up 675 colleges across the country. Higher One raised $124 million by selling stock publicly this summer, and sales in its most recent quarter reached $27 million, more than double from a year ago.More than three-quarters of that money came from the fees it charges merchants and students. Higher One chief executive Dean Hatton told investors last month that the success of the business depends on signing up as many students as possible.
Students complain that the loan cards are riddled with high fees, and they have organized protests at several campuses. Below are a list of fees associated with the card
- Higher One charges an “abandoned account” fee of up to $19 a month. Students get this fee if they don’t use their account after nine months — a trigger point that seems to coincide with summer break.
- You also pay $2.50 when they don’t use a Higher One ATM, located only on college campuses.
- A 50-cent charge for using a PIN to make a purchase rather than a signature,
- The school warns students not to throw away the card even though it may look like junk mail – especially since it carries a $20 replacement fee.
Several large banks also have begun moving into the growing sector. This spring, Citigroup inked a deal with the City University of New York to create a similar program using prepaid cards.
This could mean many more of these Frankenstein Student ID card are soon on there way to your college town.