New study: Wells Fargo, other banks, charge outsized fees to college students despite federal rules
Students at colleges compensated by banks face dubious debit card fees
WASHINGTON — Attending college can be one of the most expensive endeavors Americans face. According to U.S. PIRG Education Fund’s new report, Debit Cards on Campus: Putting Student Financial Well-Being At Risk, many banks are adding to that expense by partnering with schools to offer and aggressively market new checking accounts to students. Students with these accounts, including some with Wells Fargo, paid twice as much in fees on average as students at campuses without these shared agreements, despite federal protections put in place in 2015.
“Many students already carry a crushing burden of student loan debt to pay for college. High bank fees make that load even heavier,” said David Rossini, chair of U.S. PIRG Education Fund’s Consumer Protection program.
Students paid $15 a year on average in fees at schools where banks did not pay the college to market their products, according the U.S. PIRG Education Fund review. However, at schools with paid marketing agreements, the amount students paid in fees was twice as high. Despite Wells Fargo only issuing a quarter of the campus debit cards nationally, their account holders racked up nearly half of total fees.
In 2015, the Department of Education implemented rules to help eliminate abuses, including overdraft or per-swipe charges, yet students still paid $24.6 million in fees last year.
“The Department of Education should end aggressive paid marketing that pushes students into accounts with hidden fees, and ought to investigate the banks who participated in these practices,” said Kaitlyn Vitez, Higher Education Campaign director for U.S. PIRG Education Fund and report co-author. “These cards may look like normal student IDs, but the fees on the checking accounts attached to them are far from the norm.”
Banks offer financial incentives for college administrations to recommend debit accounts to financial aid recipients and the wider campus community. Students assume that since their colleges market the product, the accounts are the best option available. But that’s not the case, and anyone new on campus can get taken advantage of during the whirlwind of orientation.
“That first weekend is so overwhelming — I was signing up for anything and everything the administration pushed because I trusted them,” said Katie Craig, a recent graduate of UNC Chapel Hill, a Wells Fargo school. “I was so distracted by everything going on that I didn’t really know what I was signing up for when it came to the debit card, and my friends and I got stuck paying fees we wouldn’t have otherwise.”
U.S. PIRG Education Fund urges the Department of Education to investigate campus banking agreements and implement more comprehensive regulations protecting students from these harmful agreements, and calls on colleges to reevaluate paid marketing agreements.
U.S. PIRG Education Fund is an independent, non-partisan group that works for consumers and the public interest. Through research, public education and outreach, we serve as counterweights to the influence of powerful special interests that threaten our health, safety or well-being. U.S. PIRG Education Fund is part of The Public Interest Network, which runs organizations committed to our vision of a better world, a set of core values, and a strategic approach to getting things done.