Student loan money added on to a credit card?

[CarolinaKat]

Hmmm, they always cut me a check and MADE me come into the financial office so they could check my ID to make sure i was me. Although this was a scholarship check, applied after i had passes the drop-date for classes.

I don't see why they aren't willing to cut a paper check, did they give any reasoning?

[azphx1972]

That sounds crazy. The last thing college students need is another convenient method to spend borrowed money, unless the cards can only be used in the school cafeteria, library, etc.

[haapai]

It's becoming pretty standard to hand someone a card instead of a check or cash these days. It may not be as fishy as you think. That's how unemployment, payroll, and returns are handled these days, so I'm not too surprised to hear of a school getting on that wagon.

She probably has the option of taking the card to a bank and depositing the cash, somehow. I suggest that she do so. There aren't a whole lot of rules regarding those plastic instead of cash transactions and there can be nasty surprises like fees associated with checking your balance and inactivity fees. That fee income for the card issuer is a big reason why it's cheaper than checks for the third party (in this case, the school).

Pushing a designed-to-confuse piece of plastic on a young person is dirty pool IMHO. A young person should not be learning that this kinda gotcha is standard and acceptable.

[azphx1972]

That article pisses me off too. Someone needs to bitchslap the punks at Higher One and school administration.

Higher One says it is not coercing students to use its cards. Students can opt to receive their loans by check or through another bank, though they must go through Higher One's site to make their selection.

Maybe your sister can go this route, but still they should have made that blatantly clear when issuing the card.

But students say several of the fees associated with Higher One's card are particularly irksome, including the $19 inactivity fee, a 50-cent charge for using a PIN to make a purchase rather than a signature, and a $2.50 fee for using other banks' ATMs.

... it carries a $20 replacement fee

It is beyond ridiculous to stick those kinds of fees to students, unless the school makes the students pass a personal finance class before accepting the cards.

[haapai]

FWIW, there's a way of turning down part or all of a federal student loan. I encountered it in the paperwork that came with the loan. It's fairly simple and straightforward but don't count on the school being helpful if you choose that option. The school was set up to disburse the entire loan and the option of turning some of it down was not part of their standard operating procedure.

[Deleted]

I don't even have student loans or financial assistance that could potentially lead to a reimbursement, and I was issued a Higher One card as soon as I started graduate school.

[azphx1972]

May 18, 2011 14:50:06 GMT -5 @craftysarah said:

I don't even have student loans or financial assistance that could potentially lead to a reimbursement, and I was issued a Higher One card as soon as I started graduate school.

Yeah, the article mentions that some schools are using them as IDs. Stupid schools.

But sometimes, even those who don't receive financial aid are urged to sign up, just in case. At some schools, the loan cards double as IDs, ensuring that every student on campus has one.

That's the case at Portland State University. School officials say students must carry the cards but aren't required to activate the Higher One account.

[CarolinaKat]

We could go to the office of IDs and load money onto our IDs so they worked as prepaid debit cards. Using them meant you got discounts at the campus stores and resturants. You could use the money for things like tickets to the student theatre, but no discount there.

[ty]

May 18, 2011 14:23:07 GMT -5 CarolinaKat said:

Hmmm, they always cut me a check and MADE me come into the financial office so they could check my ID to make sure i was me. Although this was a scholarship check, applied after i had passes the drop-date for classes.

I don't see why they aren't willing to cut a paper check, did they give any reasoning?

This was on the news weeks back and people are outraged by it. New college students getting money on a credit card to spend anywhere they please other than the college itself.

Lots of students are upset because now they are stuck with all these high interest rates and find themselves deep in debt.

This was done because they kicked off the credit card companies from the college campuses that are looking for fresh students to cash in on for life with. Give them a credit card, keep them in debt for life.

As the man reporting the story on the news said, these people (credit card companies) are an evil monopoly that will stop at nothing to trap people into deep financial ruins, just so they can profit off those that never had a card to begin with.

Watch In Debt We Trust and see just how corrupt these people truly are.

""Filmmaker and former journalist Danny Schechter (WMD: Weapons of Mass Deception) investigates Americans' ongoing love affair with credit cards and the staggering level of personal debt it's created, paying special attention to the relationship between Congress and the credit card industry. In a modern society that's increasingly "financialized," consumer debt is so common that extending credit has become highly lucrative.""

[dragonfly7]

I was automatically issued a Higher One card when I transferred schools in 2007. There was an option to get a check or transfer to another bank, but I believe it was an all or nothing deal and took over a week. Since my school did not release the money until a couple of days before classes, and I had no other way to buy books, of course I used the card!

[haapai]

What a disgusting financial product!

It makes the fee-ridden payroll cards issued by my employer seem benign by comparison.

[chen35]

If it's the student loan company I work for, they add the funds onto a debit card that is basically linked to a checking account. The fund can be transferred to any other checking account, or left where they are and the student can continue to use the checking account for as long as they wish.

[alabamagal]

This is actually quite common. I was at first a little suspicious about this. The card is a pre-paid debit, not a credit card. Basically all financial aid goes to the school, they take out tuition, fees, etc. Any extra amount is paid back to the student for living expenses. At my daughter's school, they use Higher One. They are all issued a card (no fees involved). The card can be used pretty much the same as any debit card. My daughter has two checking accounts, so she automatically has the money transferred from the Higher One school issued card into her regular checking account (no fee involved). This happens the same or next day.

Just find out how to transfer from the school issued card to a personal account. It is actually faster and safer than having a check issued.

[rmtvbrooks]

If you're talking about her financial aid refund, many colleges are now going to a debit card for the refund. The college I used to work at used Higher One. Students get their refunds quicker, plus checks won't get lost in the mail. It's also a way to reduce expenses. The only thing to watch for is that many of these cards charge a swipe fee when you use a PIN number, so check the fine print. Or, just remove the money from the account and deposit it elsewhere. The only fishy here is why the college didn't advertise this better. When my college made the switch, we plastered it all over campus, sent out email blasts and letters, etc. We also worked diligently to put information in the students' hands about the fees and their options for transferring the money to another checking account. We were a small school, though, so students got a little more personal attention than at a large campus. There was no excuse for not knowing about it. It sounds like her campus didn't do a really great job getting the word out! If I were her, I'd just do a withdrawal or transfer of all the money to her regular checking account, then she can pay back that portion of the loan if she wishes.

Because this is a debit card, it's definitely better than a credit card. The average college student graduates with about $5,000 in credit card debt (in addition to student loans!). At least a debit card won't let you spend money that isn't there.

[Urban Chicago]

FYI, federal aid regs allow schools to disburse refunds like this, but the school MUST honor requests for a bank transfer/check instead.

Some students actually love this option because it prevents a check from being mailed to the parents and spent on their expenses instead of the kid's.

[rmtvbrooks]

May 18, 2011 15:41:08 GMT -5 Urban Chicago said:

FYI, federal aid regs allow schools to disburse refunds like this, but the school MUST honor requests for a bank transfer/check instead.

Some students actually love this option because it prevents a check from being mailed to the parents and spent on their expenses instead of the kid's.

I hadn't thought of the parent issue, but you're right. Refund checks are mailed to the student's HOME address, and I know some students for whom this was an issue before we switched to Higher One. Sad as it is, there are parents who will do this.

[thyme4change]

unless the cards can only be used in the school cafeteria, library, etc.

Actually, I would much prefer the cards could be used for rent and utilities.

Do schools still have cafeterias?

[alabamagal]

The cards work great for the students, as long as there are no swipe fees. Or fees to transfer money to another account.

My son signed up for direct deposit, but he did it too late. He got an envelope in his campus mail box. He said there was a letter with no check. I told him to go to the school finance office. When he called to say he had the check, he didn't want to tell me the details, but then admited that the check was still in the envelope when he went to the financial aid office. Checks are not so great!

[azphx1972]

May 18, 2011 15:53:05 GMT -5 thyme4change said:

Actually, I would much prefer the cards could be used for rent and utilities.

Do schools still have cafeterias?

Well, unless you live in campus housing, I don't know of too many landlords that accept credit cards for rent payments. As for utilities, some will accept credit cards, but others either don't or charge a fee to do so.

I just don't like the fees on these cards, plus it makes it all too convenient for students who lack financial discipline to blow their financial aid money on things like iPhones, flat screen TVs, etc.

At my alma mater, the cafeteria has been turned into a food court.

[ty]

media.www.webujournal.com/media/storage/paper245/news/2010/09/21/Opinioneditorial/Higher.One.Card.Is.More.Trouble.Than.Its.Worth-3934559.shtml

Higher One card is more trouble than it's worth
By: Collin Reischman

If you've ever attended a university in St. Louis, you've probably encountered the Higher One Debit Card. The card, which is the standard refund option for both Webster University, as well as St. Louis Community College, provides services to more than 4.8 million students, according to Higher One's website.

At a glance, this service seems both straightforward and helpful. Students waiting on tuition refunds can use the card - sent to them by mail free of charge - to access their funds almost immediately, and use the card as freely as any of their other plastic.

The reality is unnecessary fees, and complex registration processes. Institutions of higher education contract Higher One to handle their student refunds simply because they can't handle the jobs themselves. Rather than have an entire department and staff dedicated to the endless paperwork that have become the norm for student loans, they may simply pay a fee for another entity to handle the headache.

Recently, I experienced the endless joy of Higher One myself. Like many of you reading this, I have student loans (shocker) and I used these loans to pay my tuition. After Webster had calculated my tuition costs and subtracted the necessary funds from my student loans, they informed me that I'd be receiving a hefty refund.

Ecstatic, I rushed to the business office. Once I had arrived, I was informed rather politely that the piece of random plastic I'd received in the mail weeks ago and discarded into the depths of my trunk was, in fact, vital to receiving my proverbial fast cash.

I attempted - as best I was able - to inform the lovely clerk that I was not inclined to utilize the Higher One card. I informed her that I was in possession of a fully functioning bank account, and simply wanted my refund placed directly into it.

Sadly, this is not the way things work at many higher-education facilities. The clerk informed me that I'd have to establish an account with Higher One in order to refuse their services.

This misstep in logic is the most baffling thing of all. Only in the realm of financial mystery do these types of policies exist. In no other world does a company require a lengthy registration process simply to say "No Thanks," to their services.

I don't call Domino's pizza just to inform them I'll be using Pizza Hut. I don't ask for permission from AAMCO just to use Jiffy Lube.

A long search and plenty of swear words later, I'd found the card and set about getting my money. But what I didn't know what that nothing in this life is simple. And even though all I wanted was for my refund to be distributed directly into my checking account, I had to set up my account with Higher One anyway.

As a young, irresponsible college student, I'm fully aware of the dangers of simply accepting with a smile and a nod any piece of plastic sent to me seemingly free of charge.

So, as I navigated the Higher One site so I could tell them to shove it, I discovered my account could not be accessed. The upstanding folks at Higher One already had an account in my name. The account was under my Webster student e-mail account, which I have never utilized, and therefore inaccessible.

I was then forced to venture into a place few have gone; customer service hotlines. Anyone forced to call a nationwide company for a simple customer service request understands the immediate migraine it induces.

Three menu options, two recordings, and a 15-minute wait on the phone (with no amusing hold music) I was finally on the phone with a living, breathing human being. After another 30 minutes or so of clicking, refreshing, and other computer wizardry, I was finally able to reset my account.

Sure, my account was reset. Sure, this meant I'd still have to establish an account before I could then refuse it. Sure, it meant I'd have to wait an additional 48 hours for Higher One to process my direct deposit request. But hey, that's the price of having such a convenient, fast-acting way to access your student funds, today!

I believe in simplicity. It's simple for me to access my refund via my already existing bank account. It's simple for me to check my bank account at the same facility that handles my paychecks, and various other financial transactions.

What I don't need, and what I suspect very few students in general need, is another unnecessary distraction. What we need is a less tedious process and more streamlined systems.

Higher One, thanks, but no thanks.

[azphx1972]

Good article. I agree with the author. They need to make it simpler for students to move the money to their own financial institutions.

[coachsgirl0825]

I got my MBA at a school in the St. Louis area and was issued a Higher One Card along with instructions on my options of how to access the money. I went to the website, typed in the information they needed and within 2 business days had my money in my checking account. My experience with the card was a pleasant one.

[lulubean]

It's a new thing, both CC I registered for sent me a card for the balance of the loan after classes have been paid. I had not decided which CC to go to so re-registered at both of them.

[lulubean]

KK, what is the difference with the students using the cash vs the CC to purchase things not school related. I don't see how a cc is that much heinous than cash when the students uses it for non school related things.

[azphx1972]

May 18, 2011 16:31:58 GMT -5 @lulubean said:

KK, what is the difference with the students using the cash vs the CC to purchase things not school related. I don't see how a cc is that much heinous than cash when the students uses it for non school related things.

Credit cards cause more spending: www.livescience.com/2849-study-credit-cards-spending.html

[garion2003]

I wrote a long post and the computer ate it. I hear these debit cards are more common and in some ways more efficient. At my school they have to order the refund checks from the central office so it can take up to a week after disbursement to get the money. That can be tough when they need to buy books (or pay rent if they live off campus).

Are these Direct Loans? She can prevent this from happening again by just borrowing what she needs (sounds like she borrowed more than she needed, so I applaud her for wanting to send the rest back). The school should be able to return the funds if they were just disbursed. Her loan probably isnt' even assigned to a servicer yet, so she'd have to wait for that anyway.

Hopefully she returns any unsubsidized loans first.

[Deleted]

If the take the card at strip clubs, I may have to go back to college.

[Wisconsin Beth]

May 18, 2011 20:36:46 GMT -5 CCL said:

They do this at our school. It's just a debit card and most people like it. They will only credit you with whatever is left over after all of your tuition, books, etc are paid. You can't just keep putting more and more on it.

Right. But you're adding to the amount of money you're borrowing for your student loan. And they're making it easy to borrow up to your max and harder to give back what you don't need. And let's face it, a lot of people are clueless about their loans when they're in college.

[Deleted]

May 19, 2011 10:28:07 GMT -5 Wisconsin Beth said:

May 18, 2011 20:36:46 GMT -5 CCL said:

They do this at our school. It's just a debit card and most people like it. They will only credit you with whatever is left over after all of your tuition, books, etc are paid. You can't just keep putting more and more on it.

Right. But you're adding to the amount of money you're borrowing for your student loan. And they're making it easy to borrow up to your max and harder to give back what you don't need. And let's face it, a lot of people are clueless about their loans when they're in college.

the only things that should be coming out of your student loan money are tuition, fees, and room and board (if you live on campus). You would pay for books separately. If you're living off campus, that's included in your cost of attendance, so you would be able to get student loans for those expenses.

[Deleted]

May 19, 2011 10:28:07 GMT -5 Wisconsin Beth said:

May 18, 2011 20:36:46 GMT -5 CCL said:

They do this at our school. It's just a debit card and most people like it. They will only credit you with whatever is left over after all of your tuition, books, etc are paid. You can't just keep putting more and more on it.

Right. But you're adding to the amount of money you're borrowing for your student loan. And they're making it easy to borrow up to your max and harder to give back what you don't need. And let's face it, a lot of people are clueless about their loans when they're in college.

In addition, I'm not sure where the total amount you can borrow for a semester between subsidized and unsubsidized student loans would cover your entire cost of attendance for that semester (other than maybe community college if you don't have rent or utilities).