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SmartCredit.com Consumer Education President John Ulzheimer on the numerous fees charged to prepaid debit cards used for students’ financial aid.
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In focus tonight paying for college outrage continues over big banks and colleges taking advantage of students and you -- the taxpayer.
Right let me explain how works colleges strike up the deal with big banks to disperse students financial aid.
In the form a prepaid debit cards like the ones -- looking at right here.
But these cards are full of these I'm talking about -- activity these overdraft fees -- loading -- These -- -- -- money goes on and on these to close the account.
Hundreds of millions of dollars in these out of your pocket something has to be done here lots of people asking questions.
Two of them near me and John Alzheimer president of the consumer education for Smart credit dot com.
John great to see you now.
Interestingly.
Congress is starting to -- step up here George Miller and Dick Durbin are starting to say.
Department of Education.
CF -- -- Consumer Financial Protection Bureau it's time for you to look into this do you think they're gonna get action.
I act I I would be shocked if they did not get action to Jerry if you look at fifty structures of these cards.
It's it's impossible it's literally impossible -- thing about how you -- its -- saying it's absolutely impossible to use them.
And not hit some sort of feel land mine -- apple impossible and they're not -- they're not punitive fees and print multiple don't get terribly angry.
When we talk about fees meant to punish somebody for doing something wrong.
But these fees are set up so that if you load money onto the card if you use -- if you take a semester off -- -- having an activity fee.
These are essentially just punishing you for using the card like he would during normal everyday organic usage that's wrong that's what needs to be a draft.
John -- let's be very clear here the money that is being accessed here is financial aid.
It is federal dollars federal tax dollars being accessed.
By these big banks and looked at somewhere we want the money to go we want to go to the college students at the end of the day.
I want to mention to you and tell our viewers tonight that we have contacted the Consumer Financial Protection Bureau.
Because these are the folks who told us that they're here to protect us and our money.
And we've asked them what are you doing about this problem what your plant are you investigating this do have a plan for investigating this.
It's been pretty much radio silence until a few hours ago we finally got a response I believe we have -- -- full screen here.
They say students should know their low cost options to access their student loans and scholarships.
John what do you make of that.
Yeah I I suspect that this whole prepaid cards tsunami kind of snuck up on the -- be able Bennett -- -- -- on their banks right now.
Because of the momentum and their coverage and also the -- report that exposed.
-- -- student aid being siphoning off and going to the big banks I I would hope that they -- -- -- as a grass and over the next six to twelve months.
-- they were not over the past six to twelve months and I suspect but they're gonna find.
-- are gonna find a lack of of clear disclosures of -- structures and maybe most troubling scary is it lack of competition and a lack of auctions for the students did she -- are -- less expensive alternatives to this.
Hi -- -- prepaid slash student ID card we're -- -- these are coming from.
We'll let's set right now this very minute I want to would bite anybody from the CF PB to come on the show.
Tell us what you make of these.
These new cards are they fair are they hurting college students should college students be paying these.
Exorbitant -- it's what should be done we want to hear from regulators we want to hear from the bureau please come on the show talk to us about this and and let college parents and college students know where they stand.
John thanks for coming on tonight appreciate your time it's something that we will continue to expose as the days in the weeks go on I I know we'll continue to talk about it.
Thanks -- happy to be here.
