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Diverting student aid money to big banks
There must be some sort of greed gene that prompts compulsive outbreaks of financial graspiness by giant bankers. How else to explain the chronic gouges, excesses and scandals that we’re getting from this one, small grouping of humans?
Their latest reach is into the pockets of low- and modest-income college students who need federal student aid to help with today's ever-growing education costs. For decades, this financial assistance has come in the form of simple checks written to the students by the aid program or administered directly by the schools. But, of course, this straight forward simplicity begged the obvious question: How can Wall Street grab a chunk of this student education money?
"I know," cried the greed gene from deep inside a particularly-inventive banker: "debit cards!" Rather than disbursing the aid by checks, get universities to let a bank issue debit cards for students to use to withdraw their aid funds electronically. What a nice service! But wait – these are bankers. They don't do nice – at least not for free. Sure enough, the campus debit cards, cheerily emblazoned with each school's logo, have hooked more than nine million needy students to an insidious fee system, ranging from 50-cents per swipe to a $10 "inactivity fee" – yes, a fee for not using the card frequently enough.
Some 900 campuses have signed card deals with such outfits as Wells Fargo and Higher One. These high-flying financiers grin from ear to ear as they line their pockets with tens of millions of dollars a year that they siphon from the public fund meant to extend America's educational opportunities.
For information, including action tips, get a new report called "The Campus Debit Card Trap" by the U.S. PIRG Education Fund. Go to www.uspirgedfund.org.
"Banks Skim Millions In Fees From Student Aid Using Debit-Card-Linked Student Ids," www.uspirgedfund.org, May 30, 2012.