Earlier today, we told you about the U.S. Public Interest Research Group report on how the growing number of ethically questionable partnerships between U.S. colleges and financial institutions was resulting in millions of college students being pushed toward receiving their financial aid payments on cards costing hundreds of millions of dollars in fees to users each year. The study appears to have gotten the attention of some folks in Washington.
“Students, parents and taxpayers should be outraged by unreasonable fees and sweetheart deals involving campus debit cards,” said Senator Dick Durbin of Illinois
in an e-mailed statement. “When a financial institution charges debit card fees — some as high as $50 — for students to access their federal student aid money, the institution is taking away taxpayer-subsidized funding that should be helping students pay for their education.
Durbin, not exactly the most-loved man on Wall Street, accused the financial institutions involved in these partnerships of padding their coffers while putting students deeper into debt.
After all, the total student loan debt in the U.S. is currently nearing the $1 trillion mark. So it benefits no one in the long run for these banks to effectively make an education more expensive by chiseling away at students’ federal aid.
“It’s time for schools to reexamine the costs associated with campus debit cards and ensure that students are given clear and transparent choices,” added Durbin.
As many of you are likely aware, Durbin was the leading advocate of swipe fee reform — the amount of money banks charge retailers for each debit card transaction. His amendment to the financial reform legislation was intended to cut the average swipe from $.44/transaction to $.12/transaction. However, in the end the Federal Reserve set the number at $.21, with certain stipulations that could allow banks to charge up to $.24 per swipe.