February 7, 2014

Merced College students sing the blues over “blue card”

Merced College’s board of trustees heard a report from a professor and some students who found several problems with Higher One, a debit card that students use for financial aid payments.

Many complaints from students about excessive fees and privacy issues with a new financial aid debit card at Merced College have the board of trustees rethinking its approval last summer.

The board agreed during the summer to a five-year contract to pay $5,000 a year to Higher One, a company that handles the disbursement of financial aid money to college students. Those receiving financial aid can open an account, have their money deposited into anaccount or receive a check in the mail from Higher One.

After hearing the results of a student-generated survey, the board voted this week to conduct an in-depth survey of the 6,100 students receiving financial aid over the next two months, according to Robin Shepard, public information officer for Merced College.

Kyle Summerfield, who receives financial aid, said he got his “blue card” in the mail with instructions on how to start an account with Higher One. Summerfield, who is studying English and teaching, said he took issue with the school giving him no other choice but to be involved with a for-profit bank.

“I don’t understand why any institution gets to force me to do business with anybody,” the 27-year-old said. “But that’s exactly what happened.”

On top of that, Summerfield said he doesn’t think the school has the authority to give his Social Security number to Higher One. The number was one way a student can verify his or her identity when creating an account online. He said he suspects it could be a Family Educational Rights and Privacy Act violation.

Summerfield is one of many who have complained about the new system, which has replaced the practice of students waiting in long lines to pick up a check at school.

During a board of trustees meeting this week, a philosophy professor presented the findings of his class, which conducted its own survey on campus regarding the Higher One system.

According to the report, 164 students receiving financial aid returned the surveys. “The charging of fees was the No. 1 complaint by students,” said professor Keith Law.

Higher One users pay $49 per year on average in fees, according to the company. For example, the OneAccount Edge charges a monthly $4.95 fee.

Another account, OneAccount, charges $2.50 for non-Higher One ATM swipes and 50 cents any time the card is used with a PIN. There are no fees for transactions in which the user signs, as though it were a credit card.

Ninety-five of the students surveyed had received financial aid in previous years, so they had experience with both the check-based system and the new debit card system. The report stated that 74 percent would prefer to go back to getting a check.

There were a number of other complaints. One was the limited access to an ATM on campus, of which there is one, that does not charge fees to withdraw money.

Others complained about the unequal promise to deliver money. Higher One offers to deposit the money to one of its accounts the same day it’s available, but students with their own accounts must wait two to three business days and those who want a check must wait five to seven business days.

Those receiving financial aid money are most often low-income students, some of whom do not have bank accounts. Law said the same-day delivery is most tempting to those students, and thus more likely to be subject to fees from Higher One.

Those students are also more likely to be uneducated about finances, Law said.

In May 2012, the U.S. Public Interest Research Group issued a critical report called “The Campus Debit Card Trap” that dubbed Higher One the “biggest player” in the campus financial aid and debit card disbursement industry.

Higher One makes 75 percent of its annual revenue from penalty fees squeezed from students, according to PIRG. More than 100 California schools use at least one Higher One service.

Higher One paid $11 million in 2012 to about 60,000 students related to fees the company charged for insufficient funds. Higher One did not admit to any wrongdoing, and has changed a number of its fee schedules.

Merced College distributed more than $22 million in financial aid last year, according to Area 7 trustee Les McCabe.

A few members of the Associated Students of Merced College in attendance at the board of trustees meeting this week said many students have complained about the new system. Gildardo Castillo, a member of the student board, said the trustees need to bring students into the decision-making process. “I’d like to see the student body more involved,” he said.

Members of the board of trustees expressed some concerns with their approval of the contract with Higher One. Area 1 trustee Cindy Lashbrook said the school staff needs to look further into Higher One and get input from students before deciding to continue to offer it next semester.

Dennis Jordan, president and Area 4 trustee, said he has some concerns about Higher One’s business model, making money off of fees to access financial aid. “We might have dropped the ball a little bit, by not catching it,” he said.

When staff will return the findings of an in-depth study has not been determined, but the trustees said they expect to have the information before the next round of financial aid goes out in August.

In contrast, UC Merced does not use an outside agency to disburse financial aid.

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