December 11, 2013 by Clarise McCants
Last week at 250 Broadway, NYC, New York Students Rising were protesting outside of Citibank to protest a card system that allows Wall Street to skim off of CUNY students.
The protest is part of the New Day New York December 5th Day of Action and Week of Action. The Facebook page for the event states:
"Citibank provides prepaid cards to students receiving financial aid and/or work-study. What they don't tell you is that the card is riddled with hidden fees. Also, it allows Citibank to use student financial aid as a short-term loan for themselves. CUNY gives Citibank a 300 million dollar loan via its Scholar Support Card.”
The fight against Citibank comes shortly after the Consumer Financial Protection Bureau held a discussion over concerns with the “campus debit card marketplace” – a phenomenon where banks partner with banks and profit off of students.
As U.S. PIRG reported on the heels of the hearing, CUNY and Citibank are not the only offending institutions:
In some instances, banks are paying big for the privilege of offering these services to students. A contract between Ohio State University and Huntington Bank includes $25 million in payments to the school over 15 years—a hefty investment for the ability to sock thousands of students with high fees through these checking accounts.
In other arrangements, financial firms like Higher One pay colleges to load student financial aid onto debit/check cards and, in turn, the company socks students with fees to access their aid. In fact, Higher One makes 75 percent of its annual revenue from penalty fees squeezed from students.
The U.S. PIRG report found that students are subject to a number of steep and questionable fees, including a variety of per-swipe fees, inactivity fees, overdraft fees, ATM fees, and fees to reload prepaid cards.
In the report detailing the campus debit card marketplace, “The Campus Debit Card Trap,” U.S. PIRG found that two in five college students across the country now have access to a campus debit card linked to their student ID card—and that some even come preloaded with their financial aid:
“These types of debit cards are aggressively marketed to students through financial aid disbursement and student identification channels, which are both essential to navigate student life. Some campuses have even consolidated all these functions onto a mobile phone app, making the collusion initially more attractive to students.”
The news is troubling. At a time when student debt levels have surpassed one trillion dollars, institutions should be protecting students from predatory practices – not offering them up to be taken advantage of.