Lawmakers Suddenly Care About Those Fee-Laden College Cards That Are Now In The News

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.

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  1. homehome says:

    I always found it funny that congress and the house say they can do multiple things at a time, but yet they move so slow and so post reactive about most things. They’re still on stuff from the 1980s.

  2. ThinkingBrian says:

    You just said it in the title “That Are Now In The News”, if its in the news, most likely more than not, people start to care and complain out loud by commenting, blogging and voicing there opinion including to lawmakers. Its no different than a customer complaining out loud about a raw deal that they got from a retail store or manufacturer.

    Should these cards be looked into, yes, but most of the part, it takes public out cry to get anything done and I really don’t see much from lawmakers though. They can’t get anything done.

    • bwcbwc says:

      It isn’t just that it has to be in the news. Someone has to draw their attention to the fact that the issue is in the news. So if a constituent complains about the bank fees nothing gets done because there is no publicity to be gained, but once it’s in the news, the legislator gets to score the double play: 1) responsive to constituent complaints 2) publicity in responding to a news item.

  3. dush says:

    “Students, parents and taxpayers should be outraged by unreasonable spending and sweetheart deals involving me, my colleagues and special interests,” said Senator Dick Durbin of Illinois.

    Fixed.

  4. crispyduck13 says:

    Ah politicians, always the last to criticize things that have been dicking the common folk over.

    • duderonomy says:

      wouldn’t that be because if they pass a law against it no one else needs to complain?

  5. Blueskylaw says:

    “”Students, parents and taxpayers should be outraged by unreasonable fees and sweetheart deals”

    Notice that Dick didn’t say he was outraged at what was actually going on – he merely said he was outraged by “unreasonable” fees and “sweetheart” deals. This statement lets him appease both his constituents by making it seem like he cares and his corporate donors by not directly accusing them.

    You don’t get to be Senator by only agreeing with one side.

  6. Budala says:

    Somebody’s fingers weren’t greased enough in Washington.

  7. Budala says:

    Somebody’s fingers weren’t greased enough in Washington.

  8. fsnuffer says:

    I thought the point of college was to start letting your children out into the real world to learn how to take care of themselves. All they are learning is dependance on government. I guess they don’t appreciate the value of the money they are getting so easily via government loans.

  9. StarKillerX says:

    I have less of an issue with the banks offering them than I do with the colleges that promote and/or require the use of them.

  10. loggg says:

    Colleges have engaged in many scams. Excessive prices on required textbooks, extremely strict parking policies with hefty fines for violations, and perhaps the biggest: dragging out degree programs so they take 5 or 6 years instead of the 4 they’re supposed to take. Even encountered a bill change machine at the library that gave only 95 cents for a dollar bill, with a little sign explaining that it kept 5 cents to defray expenses.

    • StarKillerX says:

      At a local community college I went to I signed up for a required intro to sociology class for a summer semester. For this 6 week class the professor required 6 textbooks, not surprisingly 5 of them were written by him and from talking to people who had his class no book was used in more then a single class during the regular semester.

      Needless to say I switched to a different instructor and sent a letter off to the head of the department and school pointing out the flagrant scam occuring on their campus (not that they cared)

      • Conformist138 says:

        My community college wouldn’t care about that- they are getting more and more notorious for the “custom editions” of textbooks. They are identical in every way to previously published books, but they have a new cover (usually something local, like a picture of Mt. Hood, or added text claiming it is a “PCC Custom Edition”) and a slightly different title and/or ISBN. Finding a cheaper copy becomes a huge risk since the copies in the bookstore are sealed so you can’t tell if something online with a different cover matches content on the inside.

        My school is also so behind the times when it comes to their technology and networks that last year the ENTIRE thing went down. I mean, everything: phones, intranet, billing systems, student and faculty email, online courses, etc. It lasted so long (a solid week of everything being down at once) that most students to lived through it are convinced it was the result of someone hacking the system. The school just said it was ‘technical errors’ and nothing more, but I can’t think of another technical error that would bring down an entire college.