Student debit cards continue to create controversy

Angel Mack

A plastic card comes in the mail with the Kent State University logo for every new student enrolled. This card gives students access to, where they can make an educated decision about how to get their refund from the university. However, some students don’t seem to know their options.

“When I got it in the mail, I had no idea what it was,” said Kristen Hamilton, freshman exploratory major.

Elisabeth Van Stone, freshman exploratory major, said all she understood from freshman orientation was that the card was important and not to be thrown away.

“If you get a refund, it’s through that,” she said.

Advocacy groups Consumer Financial Protection Bureau and Campus Progress are concerned that students should be more educated about these cards.

“Making sure students are financially savvy will help make sure that students aren’t even in more debt than they anticipated before going to school,” Rohit Chopra, private student loan ombudsman with the Consumer Financial Protection Bureau, said in a phone conference with student journalists Tuesday.

The Concern

The U.S. Public Interest Research Group released “The Campus Debit Card Trap” report in May. The report “found that banks are targeting campuses as gate keepers to young consumers,” Rich Williams, U.S. PIRG higher education advocate, said in the same phone conference.

The report has also gotten the attention of Sen. Sherrod Brown.

“As a strong advocate for students across Ohio, Sen. Brown is concerned that hidden fees and penalties could cut into the financial aid disbursements that students receive,” said his press secretary Allison Preiss. “These debit card fees could eat away at students’ already-limited financial aid awards — money meant to pay for their education.”

“Our research shows that campus debit cards can frequently be wolves in sheep’s clothing,” said Williams.

Anne Johnson, director of Campus Progress, said student debt is at an all time high. The average college graduate has more than $25,000 in debt, more than debt from credit cards and auto loans.

Johnson said during the phone conference that the fees taken out of student accounts are especially harmful because the students who are receiving refunds are usually from families with low to moderate incomes.

The Card

Stina Olafsdottir, manager of student accounts receivable at the Bursar’s Office, said students’ dependence on financial aid was a driving factor for Kent State implementing the Choice Card.

Before signing with Higher One, the school could tell students when their refund was issued, but could not track the check in the process.

“We could always give you a rough estimate, but our students can’t rely on estimates,” she said. “I mean, most of our students that get a refund, this is what they live off of.”

The card gives students access to the website where they can choose to receive the refund in the form of a paper check, direct deposit or a free checking account with Higher One. Only after selecting the free checking account can a student use the Choice Card as a debit card.

Three Options with KSU Choice Card

  • Paper check: Students may receive their refund in the mail.
  • Direct Deposit: Students may receive their refun directly in their pre-existing bank account.
  • Debit Card: Students may start a free checking account with Higher One and have their refund put on a debit card.

Tori Chewning, freshman integrated health studies major, said she chose the paper check option “‘cause I knew how it worked.” Chewning used to see when her refund would arrive.

Students can log onto the website at any time to change their refund option.

The Future

Preiss said Sen. Brown was an original cosponsor of the Credit Card Accountability Responsibility and Disclosure Act, which went into effect in early 2010. Sen. Brown and advocates like Johnson agree that the laws that apply to credit cards under the CARD Act should also apply to debit cards and bank accounts on campuses.

“[Sen. Brown] believes financial institutions should voluntarily adopt common-sense measures that will protect students,” Preiss said. “This would ensure that students receive clear, easy-to-read information on the terms of the card and fees associated with its use.”

Olafsdottir said she encouraged students to be informed consumers.

“Anytime you sign up for an account,” she said, “you need to make sure that account is right for you… you understand the current terms and conditions of that account… you understand their fee structure… you know you have to sign and swipe to not get fees.”

Contact Angel Mack at [email protected].