As Fall Financial Aid is Disbursed, Senator Issues Urgent Warning to Students Using Campus Debit Cards

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Jon Fox

CALPIRG Education Fund

San Francisco, CA – U.S. Senator Sherrod Brown (OH), Chairman of the Senate Banking Subcommittee on Financial Institution and Consumer Protection, issued an urgent warning to students receiving financial aid in the next two weeks that predatory bank fees can quickly cut into their college money.

Senator Brown’s warning to students comes as many schools disburse federal student aid in the next two weeks.  “It’s unconscionable that a financial institution is siphoning off students’ critical financial aid to pad their bottom line,” Senator Brown said on a call with reporters.  Senator Brown explained how he fought to protect students from banks on campus with the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act passed in 2010, but financial institutions are now avoiding those rules by using debit cards.  “Students shouldn’t have to watch their federal aid dollars go to debit card companies,” Senator Brown concluded. 

Banks are back on campus this Fall with new and aggressive tactics that can leave students deeper in debt,” said Jon Fox Williams, Consumer Advocate for CALPIRG Education Fund.  “Companies like Higher One are preying on the most needy students in our country, siphoning off millions in student aid dollars with high bank fees.”

For years, students received their financial aid money free through a check or direct deposit, but recently many colleges have outsourced disbursements to companies like Higher One that allow money to alternatively be disbursed onto debit cards. While selecting the card choice may seem most convenient for colleges and students, a recent PIRG report revealed that some banks and financial firms often encourage the choice of the card over the alternatives by delaying access to disbursements or through other methods. It is estimated that at least 70% of students choose the card for the more rapid access, but find their aid whittled away by fees – including $0.50 to swipe the debit card using a PIN number, inactivity fees of $10 a month starting as soon as 6 months and overdraft fees as high as $38 per transaction. 

“Higher One made $88 million from fees directly charged to students last year alone,” noted Jon Fox. “Financial aid should go to supporting a student’s education, not a bank’s profit margin.”

Senator Brown released a letter he sent to Higher One calling for the company to voluntarily adopt best practices, including improving fees and disclosures, publicly disclosing contracts, submitting annual reports to regulators on account terms and conditions, and restricting tangible gifts to college students on campus.  Banks offering credit cards on campus already are already required to meet these requirements through the CARD Act. 

To see Senator Brown’s full release click here:…

For a full copy of the US PIRG report, The Campus Debit Card Trap, campus click here:


The California Public Interest Research Group (CALPIRG) is a result-oriented public interest group that protects consumers, encourages a fair sustainable economy, and fosters responsive democratic governance.




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