A growing number of schools are connecting with banks to add a debit card function to college student IDs, allowing students to purchase items like school supplies and on-campus food and receive financial aid or refunds, Voice of America reports. At least 1.1 million college students now use campus debit cards. While acknowledging the cards’ potential usefulness, the U.S. Public Interest Research Group (PIRG) recently flagged a drawback: in the last year, students paid more than $24 million in fees for overdrafting accounts, withdrawing money from another bank, and conducting international transactions.
The risk of marketing debit cards on campus
Kaitlyn Vitez, PIRG’s higher education campaign director, told Voice of America that banks do a poor job of explaining possible fees to students, adding that students may mistakenly interpret paid advertisements from banks as official school programing.
PIRG found that students at schools that received money from banks were paying more than twice as much in fees as students at schools with unpaid agreements. Wells Fargo Bank, for example, “earned nearly $11.3 million in fee payments from students at the 24 schools it had paid agreements with last contract year,” while SunTrust Bank earned more than $1 million from Florida State University students alone.
“All this information at the Department of Education’s fingertips that they’re not looking into, and there’s real harm being done to students,” Vitez says.
Financial burden or tool for learning fiscal responsibility?
Proponents of campus debit cards say the large number of students signing up for them proves the service’s utility. Students can receive lessons on financial responsibility from banks like Wells Fargo, and parents can receive special permissions to observe students’ debit card activities.
“We’re proud of the fact that four out of five students that join us through the campus card program stay with us after they leave school,” said Wells Fargo representative Jim Seitz. Some banks also have announced changes to their campus debit cards: Wells Fargo, for example, recently said it will allow student account holders to overdraft their accounts once per month without a fee.
However, Tanya Ladha, the director of the Center for Financial Services Innovation, a nonprofit consumer support group, points out that few students enter college having learned to manage finances, and some students’ parents lack financial knowledge themselves. PIRG says this leaves certain students, including first-generation and low- and moderate-income students, especially vulnerable to high fees.