HigherOne, a Connecticut-based credit card company, has issued a new line of loan cards that have swept many U.S. college campuses by storm.
These cards, similar to debit cards, differ from traditional forms of plastic currency in that they are linked to a student's financial aid package and allow students to easily access and use money left from their college loans after subtracting the cost of tuition. Because of agreements with more than 675 campuses nationwide, more than a million students arrived at school this fall to an envelope from HigherOne containing a new card and a letter with instructions about how to establish an account.
The goal of this initiative is "to ensure students receive Financial Aid refunds quickly, can pay tuition and bills online, make on-campus and community purchases and learn the basics of financial management," according to the HigherOne website.
Administrators at many participating colleges view the cards as a simultaneous money and time-saver, sparing financial aid offices the hassle and expense of physically mailing out refund checks for excess loans.
"It originally took about three weeks for students to receive a refund check," said Judith Archambault, bursar at the University of Maryland, Baltimore campus. "We now outsource the job to HigherOne so that students receive their refunds at least one week sooner."
Some, however, are questioning the nature of the exclusive relationships between colleges and such card-carrying companies - many of these cards sport the university logo, with some even serving as the primary form of student identification. And because loan cards are not subject to the same regulations as credit cards, HigherOne's new cards do not bear the same restrictions against common forms of "hidden" fees, including a 50-cent charge for using a PIN rather than signing to make a purchase and a $19 fee after nine months of inactivity.
Because of these concerns, the University has yet to implement a similar program.
"I don't think it would be a good fit at U.Va as it is currently set up," said Scott Miller, associate director of Student Financial Services. Miller also noted that SFS works with groups on-Grounds such as Hoos for Open Access to increase financial literacy and promote effective budgeting, and that the nature of the fees associated with the loan cards is not compatible with such goals.
Some colleges have attempted to mitigate some of these concerns by outlining methods for avoiding incurring the fees associated with using the card. Students at Clayton State University are "encouraged to 'swipe and sign' for purchases" to avoid the 50-cent penalty for PIN-based transactions, according to its website.
"We just want to be sure that students understand the rules concerning the card," said John Shiffert, Clayton State University spokesperson and director of University Relations, in an e-mail. "Many students have tight budgets, and may overdraw their accounts when they don't realize they have the 50-cent fee to deal with"
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