Senators Call for Plan to End Unreasonable Fees and Practices Associated with Some Campus Debit Card Programs
[WASHINGTON, D.C.] - Today, U.S. Senators Dick Durbin (D-IL), Jack Reed (D-RI), Robert Menendez (D-NJ), Sherrod Brown (D-OH), Jeff Merkley (D-OR), Richard Blumenthal (D-CT) and Barbara Boxer (D-CA) called on institutions of higher education to develop a plan to put an end to a number of unreasonable fees and practices associated with campus debit and prepaid card programs that are being increasingly pushed by financial institutions.
According to a report released in June from the U.S. Public Interest Research Group (U.S. PIRG) Education Fund, more than 9 million students across the country are at risk of being nickel-and-dimed with fees because their campus debit cards may come with high user fees, hidden transaction costs and insufficient consumer protections – adding to the mountain of debt many higher-education students must take on.
In a letter to the Presidents of six higher education associations representing several thousand institutions across the nation, the Senators called for transparency and fairness in campus debit-card programs: “While well-operated campus debit and prepaid card programs can provide efficiencies and benefits for institutions and their students, the U.S. PIRG report has highlighted how some programs have served more to the benefit of banks than to the maximum benefit of students. We urge you to contact your member institutions that partner with financial companies and work with them to ensure that campus debit and prepaid card programs operate efficiently, transparently and fairly.”
Today’s letter was sent to the following higher education institutions: American Association of Community Colleges; American Council on Education; Association of Public and Land Grant Universities; Association of American Universities; National Association of Independent Colleges and Universities; and American Association of State Colleges and Universities.
Text of the letter below and attached:
Dear leaders of the higher education community:
The U.S. Public Interest Research Group Education Fund recently issued a troubling report entitled “The Campus Debit Card Trap,” which examined how financial institutions have been increasingly pushing debit and prepaid card programs on campus. The report highlighted a number of unreasonable fees and practices associated with some of these programs. We hope to work with the higher education community to take steps to ensure that these card programs are fair, transparent and reasonable. We ask for your assistance in this effort. Specifically, we ask that you urge your member institutions to address four areas of concern and to develop and share with us best practices to be implemented on their campuses.
First, to promote transparency in debit card contracts that educational institutions have with financial companies, we urge that such contracts be fully and clearly disclosed to the campus community so that students can be confident that the institution negotiated a fair deal on their behalf with respect to fees and terms and that there are no conflicts of interest in the arrangement. While some institutions already make these contracts publicly available, all institutions should do so and ideally should post the contracts on their website.
Second, all institutions should negotiate with financial companies to ensure that student fees are reasonable and that students are not charged inappropriate fees such as PIN debit usage fees, ATM balance inquiry fees, inactivity fees, and unreasonable overdraft fees. These types of fees are not necessary to operate a campus debit card program and serve as an obstacle to responsible student behavior.
Third, when a student’s federal financial aid has been disbursed via a prepaid or checking account that the university has endorsed or assisted a student in setting up, it is troubling that a portion of that disbursement would then be taken from the student via fees. Such fees deviate from the principle that taxpayer-subsidized student aid dollars should be used to help students pay for the cost of attendance for their education, which does not include banking services. We urge the higher education community to seek to eliminate bank fees that are deducted from disbursed federal financial aid.
Finally, we are concerned that the agreements between educational institutions and financial companies may endanger students’ privacy. Educational institutions that partner with financial companies and hand over students’ personal and financial information should ensure that this information is not used by financial companies to market unrelated services or sold to third parties without students’ affirmative, opt-in consent. Equally important, students’ purchases with a campus debit card must not be used to track students’ purchasing behavior or build marketing profiles of students without their knowledge and consent.
While well-operated campus debit and prepaid card programs can provide efficiencies and benefits for institutions and their students, the U.S. PIRG report has highlighted how some programs have served more to the benefit of banks than to the maximum benefit of students. We urge you to contact your member institutions that partner with financial companies and work with them to ensure that campus debit and prepaid card programs operate efficiently, transparently and fairly.
Thank you for your consideration of this request.
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