Standing up for Students

Quianna, a Kent State University nursing student, receives her federal financial aid through a debit card, rather than a paper check. She chose to do this because she was told that she would get the money faster than she would if she waited for a paper check. But what no one told Quianna was that some of her already-limited financial aid dollars would be siphoned from her account and into the pockets of the financial institution that stored her funds.

Unfortunately, Quianna’s story isn’t unique. At sixteen Ohio schools, students can now receive their financial aid checks on debit cards instead of through a paper check. But some unscrupulous financial institutions are trying to make extra profits from students who opt to use these debit cards. When I heard that hidden fees and penalties were cutting into students’ precious financial aid dollars, I knew that some financial services companies were up to their old tricks.

These debit card companies are charging fees – sometimes 60 cents for a transaction as simple as checking your account balance or $5 for using an out-of network ATM– that are cutting into students’ financial aid awards – money meant to pay for their education.

The largest issuer of these cards is an out-of-state company, Higher One, which has card agreements with 4.3 million students at 520 campuses – including seven campuses in Ohio.

Last year, this company made 80 percent of its $142.5 million in revenue by siphoning fees from student aid disbursement cards. Higher One was recently fined $11 million by the Federal Deposit Insurance Corporation for overcharging students. 

Simply put, when it comes time to choose between a debit card and a paper check, not knowing the difference between the two can be costly for students. We need to be absolutely certain that students aren’t being pressured to use debit cards, and that they fully understand the terms.

That’s why I’m pushing Higher One, the student debit card company in the nation, to reform its student debit card practices – and protect students at the Ohio schools which use its services to receive their financial aid.

And I’ve written to the company’s president & CEO – asking him to provide students using their cards with the exact same disclosure that holders of credit cards holders receive by law. This would ensure that we’re not wasting federal student aid dollars on excessive fees.

I’d like to see the reforms we made for credit cards apply to debit cards – especially accounts storing student financial aid.

I’m also asking that the company voluntarily adopt common-sense measures that will protect students.

Higher One should improve fees and disclosures, including: restrictions on over-the-limit fees; requirements that penalty fees be reasonable; and a prohibition against inactivity fees.

The company should also restrict the use of gifts to college students on or near campus, or at campus-sponsored events in exchange for using debit card services.

Higher One should be required to submit an annual report to the Consumer Financial Protection Bureau (CFPB) and Department of Education including the terms and conditions of all promotional agreements with colleges, including the number of student debit card accounts opened during the time period.

These are simple measures that can and should be taken to level the playing field and ensure that students can make wise financial decisions.

It’s also important that students know how to protect themselves. Those that have questions or concerns about these financial products should visit the Consumer Financial Protection Bureau website at The CFPB recommends that students understand that they can’t be required to use a specific bank or card, consider choosing an account before arriving on campus, and sign up for direct deposit if they already have a checking account.

Students can also contact the CFPB’s Private Student Loan Ombudsman, which I fought to create through the Wall Street reform law, to learn more about using these products responsibly or to share their stories.

We simply cannot afford to let financial companies overcharge the students trying to earn an education and contribute to our state. That’s why I will continue to fight to ensure that Ohio students see their financial aid dollars used to pay for tuition, room, and board – and do not go to hidden fees and charges.