Debit Cards Staying at LCC

The Register Guard (Eugene, OR), July 30, 2012 | Go to article overview
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Debit Cards Staying at LCC

Byline: Diane Dietz The Register-Guard

Lane Community College is signing a second five-year contract this week with Higher One, a financial firm that disburses federal financial aid to students - and in the process charges students a lengthy and unusual set of fees.

In the spring, when the college was reviewing the contract, some students opposed renewal, saying they shouldn't have to spend their public grant and loan money - meant to further their education - on fees charged by a publicly traded financial firm.

Higher One's fees work out to about $4 a month per student, according to the company. Total fees charged to Higher One customer accounts netted the company an $88 million profit in 2011, company filings show.

Students can shift their student funds to another financial services company if they prefer not to use Higher One.

In the new contract with LCC, Higher One offered "sweeteners" that should reduce costs for the college and for the fee-paying students, college Chief Financial Officer Greg Morgan said.

"They've added in a lot better disclosure of all their fees upfront where the student has to look - (the student) just can't ignore it - and go forward with the process of signing up," Morgan said.

Higher One, based in Connecticut, takes on the job from colleges of disbursing financial aid, at a cost savings over the traditional delivery method involving college staff cutting checks and then handing or mailing them to each student.

Some schools, such as the University of Oregon, have kept the disbursement job in-house by routing the aid electronically directly to students' bank accounts.

"They require people to have a bank account," Morgan said. "They're (dealing with) a little different demographic. They're going to have students longer term, and they're set up to do automated clearing house transfers and we just weren't."

Federal regulators taking a look

Some of Higher One's controversial student fees, meanwhile, have drawn the scrutiny of federal regulators.

Higher One is nearing an agreement on paying a fine that would end an 18-month Federal Deposit Insurance Corp. investigation of overdraft fees the company charged between 2008 and 2011, according to an Associated Press report from earlier this month.

In connection with the investigation, the company already refunded $4.7 million to customers who had been charged the fees, company filings show.

Higher One disputes the report that federal fines are in the offing. It has had no "formal communication" from the FDIC, spokeswoman Shoba Lemoine said in an e-mail.

Higher One holds card agreements with 830 campuses nationally that enroll 6.2 million students, according to testimony at a May Department of Education hearing by Higher One attorney Robert Barbieri.

Critics say that colleges and universities herd students into activating Higher One debit cards, which have bank accounts attached.

Participating schools give Higher One their students' full names, addresses, phone numbers, dates of birth and e-mail addresses. LCC, for example, provides all that data to Higher One, according to the school's contract.

Higher One sends all the students - including those not getting financial aid - a debit card at the start of the school year.

Higher One typically puts each college's logo on its debit cards.

Last year, the only way LCC students could get their grant and loan money was to activate the debit card that Higher One sent.

Students had to log onto the company's website with the card number, and only then, if they didn't want to keep the money with Higher One, could they opt to get their financial aid by check or else choose to have it deposited electronically into their own bank or credit union account.

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Debit Cards Staying at LCC


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