Colorado students can now access their financial aid money through a credit card company-for a hefty little fee.
According to an article by David Migoya in the Denver Post:
Community college students statewide are being pitched a debit MasterCard promising faster financial aid and tuition refunds, but with steep hidden fees to access the cash.
Some students say they felt pressured into activating the debit card and its accompanying bank account — mailed at the start of the semester to 135,000 students attending the state’s 13 community colleges — because it appeared to be the only way to obtain their loans, grants or other necessary college funding….
The credit card fees can be as high as 3 percent. While such credit cards are common across college campuses, what’s new here appears to be the relationship between the credit cards and the access to campus-based financial aid.
According to the article, a “mailer that comes with each ready-to-use card touts itself as ‘the key to faster refunds.’” So students had to sign up for the credit card in order to get their refunds in a timely fashion. Students can still get funds deposited into their bank accounts the normal way, but it takes longer.
This credit card relationship is part of a new contract between Colorado Community College System and Higher One, a financial company based on Connecticut:
Unlike affinity agreements, where universities are paid by banks for marketing access to the student body and faculty, the state is paying Higher One more than $430,000 to provide the financial-aid debit cards, according to its contract.
The agreement looks like a pretty sweet deal for Colorado, which is looking to save money wherever it can, and the credit card company, which can get a hold of many new customers just based on where students go to school. For the students, however, this agreement is a little troublesome. Why, exactly, is it good for their college to encourage them to sign up for one particular credit card?