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SmartCredit.com Consumer Education President John Ulzheimer and U.S. Public Interest Research Group’s Rich Williams on the fees banks are charging o...
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Many are calling at the campus debit card -- a scathing report finds nearly 1000 colleges nationwide.
Are pushing students to receive financial aid through prepaid debit cards issued by big banks.
It's being sold to students is a cheaper way for go to college to give students their money.
And it is cheaper.
For the colleges.
The only problem is like all prepaid debit cards they have hefty fees -- banks raking in millions -- unsuspecting college students and of course.
-- of the tax favour.
Joining me now the co author of that report rich Williams.
It's an education advocate for the US public interest research group who conducted the study and John Alzheimer president of consumer education for Smart credit dot com.
Welcome to you both -- I wanna start with you you guys conducted this study what was the most surprising result.
Yeah I think people would be shocked to learn that some of the nation's biggest banks.
Are -- -- actually hundreds of millions of dollars every year.
At a Federal Student Aid programs this impacts millions of students.
Some the most needy students in the country.
These exclusive.
Contracts also provide an unprecedented.
Opportunity.
For these financial institutions you bundle and offer.
They are there other loan products like private student loans or credit cards to students with virtually no competition.
Well you know I've been looking at this and now I understand why did you trillion dollars and student loan debt because.
Of stuff like this you know just the bank siphoning off money off of financial aid.
John Alzheimer tell -- what you make of this.
Well I think the results of the study are fantastic not fantastic because of what's happening but fantastic because of the exposure or.
And the breath of the problem that has been exposed this is what we need to hear we need to hear about the problem.
And the breath of the -- because now we can start getting something about -- we've been attacking these prepaid debit cards.
And data cards for some time now because of the fee structures.
And know what I thought that this is just yet another avenue.
To basically siphon off money gets posts -- to educated consumer vs go to pat at the bank account.
The bank.
-- let's dig into this a little bit more rich I want to show folks we're talking about -- is what we're actually talking about here.
So some of these banks charge fifty dollar fee if -- account is overdrawn for 45 days.
A ten dollar monthly fee if the students stopped using.
The account for six months a twenty under 38 dollar fee for over drying the account with a recurring bill payment.
And 5060 the pensive signature at a retail store now.
Question -- you riches how many of these students are educated enough about how to use a debit card that they even know -- -- -- Well quite frankly a lot of students don't really realize that they're getting eight complex.
Bank account when they're signing up for the it's.
They you know for decades students were able to get their financial aid.
-- freed by a checkered directly into their bank accounts so many students you know these cards almost -- -- what do Starbucks gift card where they spend it till it's gone.
But then these fees start piling up justice simply is using a debit card as a debit card and -- -- for that.
Or just trying to save money.
For the summer if you save your money for six months because you're not spending that incurring fees spending you could be hit with with -- is just not right.
And just give some additional context here so colleges started did do this because they.
Had to spend money adult lap this Dell right if they're gonna give out financially they had to find out find a way of giving it to the students and in fact these banks pay.
To partner with the schools so there's money moving every which way and certainly out of students' pockets.
John what do you think students right should be.
Wow.
You know it's interesting -- -- to move that means that you mentioned and probably mortgage he didn't mention are actually.
For credit card issuer to charge or credit -- -- -- charging an activity fee at a credit card issuers not allowed to market.
Credit card products on campus to students and these are credit cards these I I stay.
I understand that it's yet another loophole.
That that banks were able to drive straight through it out -- it allows for the cross marketing a product because of the other non credit card account.
And it's and that's not a credit card product as you point out.
And there is no restriction on a lot of these fees but most of adults don't understand a few structures of these car -- right.
-- assuming that an eighteen year old kid who's supposed to be learning about biology and English and science.
Understand -- -- is it is ridiculous.
I don't know that more disclosure is really going to help that there has to be some sort of camera works for -- little because this just said Marlene yeah it isn't colleges will be looking out for the rights of these kids.
A nation may be had not just giving away the store what should be college.
As students rights be here rich.
Well you know I'm existing credit cards come up we released a similar report five years ago conflict -- -- credit card trapped.
Which outlined almost the exact same problem of yeah street's continued intrusion onto college campuses.
-- there -- all generated outer banks everywhere across the country I think.
Saying Wall Street you know adding that sort of misleading a little bit.
Go ahead -- rich.
Thanks Wall Street and so there's a couple things that I think cubic campuses certainly can -- some of the agreements that we've seen you know our our.
Well structured debit card program could be a great benefit not only the school who's looking to.
Offset many -- cuts that they are experiencing the state level.
But could be beneficial to students -- they're getting their financially quicker and it in an easier to use electronic format but what we're seeing are the schools are getting less the benefit.
In the students are left with high fees that's quickly to waive their loan and grant.
-- -- this story just makes me crazy and I know viewers out there.
They -- kids they have grandkids made their college students themselves and you don't -- at first glance you got so much on your mind -- a college student you don't think about looking into the details of this at all.
And it's no surprise John -- -- -- that last word here it's no surprise that now we see college.
Loan debt exceeding credit card debt for the first time.
Because of this kind of thing as slippery slope in which you build up to what you -- and you have no idea how you doing.
You're suggesting and it's not -- close anymore a couple of years ago as 800000000800.
Billion -- over a trillion for the student loan debt and it's really not slowing down there's really nothing on the horizon that suggests.
If this problem will be me open will become all the -- -- If this is really simple assault it's essentially that 100%.
Of money -- supposed to be used for student aid must be used for student aide it cannot be basically out whittled away in -- form of fees but again what the what does ecology disabled and we have to increase tuition across the boards of to subsidizing you sort of costs that are happening there's -- there's really no good way to solve a problem because everybody can point to the other person and -- all -- And at the end of the day the bank has really and -- a lot of these particular cases is the only game in town for these types of transactions and they really control the purse strings.
Well -- idea with that with the really scary part of that says.
There's an unloaded store of funds because it's coming from the federal government at a record federally backed loans so -- you let me in every other taxpayer out there that's footing the bill for that and that.
Is what is so outrageous John Rich thank you so much for coming on night rich if you get more updates on this let us know it's.
An unbelievable story that we Delhi will --
