Bad Voodoo: Transforming Student IDs Into Debit Cards

Cash-strapped colleges are partnering with banks to transform student IDs into debit cards. The deals are a windfall for the institutions, but force students to open accounts laden with hefty penalty fees and surcharges.

Angry anti-corporate long-haired hippie Ryan Klute had this to say of the arrangements:

“I’m not an angry long-haired hippie against corporations, but it’s a bad idea when the university and the company have a vested interest in you spending your money so they can make money off you.”

The schools benefit from the exclusive agreements whenever students swipe the cards. They also receive annual payoffs that can reach $1 million. The banks cash-in when students like Brad Vehafric, a Portland State junior, accidently overcharge their account and get hit with $150 in fees for buying a cup of coffee.

In 2007, 127 schools had joined with banks to issue ID cards that double as debit cards, a 144% jump from 2002, according to CR80News, an industry publication.

A USA TODAY survey of the nation’s 15 largest universities by enrollment reveals that more than half now have bank card relationships with financial institutions. In most cases, that means the student ID card doubles as a debit card.

“If the big universities are doing it, then it’s likely the small ones will follow,” says Margaret Reed, an associate accounting professor at the University of Cincinnati. “If I were a student, I wouldn’t be happy” that colleges are pushing a product that earns them money.

Students shouldn’t assume the bank account and debit card promoted by the university will be a good deal for them, says Greg McBride, a senior financial analyst at

“In life, you’re going to pay for convenience,” McBride says. “If the goal is to get the most out of your money, it pays to shop around.”

Students should stay away from anyone hocking freebies or offering curiously convenient deals. Instead, find a credit card with a low APR and ideally, rewards, and pay it off in full every single month.

Colleges’ debit-card deals draw scrutiny [USA Today]
(Photo: Getty)


Edit Your Comment

  1. Zenne says:

    Yeah…Lamar University tried to do that. Except they fudged it up, and everybody had to carry two ID cards – they remembered the student ID I think, but a number that the library needed was not on the card (ta-da!).

    There were also flyers going around for a “free sub!” as there was a Subway on campus. When you got there, you had to sign up for a bank account, as well as give out your social security number on the spot. The money grabs made me sick, just for the sheer amount of them.

  2. oakie says:

    wow, who isnt selling out these days?

  3. oakie says:

    which bank do i need to get a hold of to sell advertising space around my asshole? i’m sure citibank or chase will be interested. i’m also offering prime territory on my taint for 20% off.

  4. henwy says:

    Easy answer is, don’t buy.

  5. ChuckECheese says:

    I wasn’t aware that colleges were cash-strapped. Endowments are at an all-time high, as is tuition.

  6. zxracer says:

    I go to Portland State and they do try to get you to sign up for the account but it is optional. If you are willing to wait 48hrs for your financial aid you don’t need to open up another account.

  7. SOhp101 says:

    Interesting how they’re going this route, since many universities already have a ‘debit card’ system in place where your student ID is linked to your balance as well.

    @ChuckECheese: Maybe for private institutions, but many public universities are getting their budgets cut more and more.

  8. SVreader says:

    I was looking in the article to see if this was mandatory, and found this:

    “Portland State students are issued a free ID card with a MasterCard logo, but they’re not required to link it to the bank account and use it as a debit card. Those who prefer a regular ID card that can’t double as a debit card can get one for $20.”

    So they have to pay extra to not have the debit card, and the article then says this option was only given after people complained about the new cards. I wonder how many of these schools aren’t even giving a price-gouging way to drop out? That’s ridiculous.

    This bothered me as well:

    “A few years ago, the school created another use for the IDs: buying books and school supplies.”

    So if the schools’ high book prices mean more overdrawn account fees, the schools’ business partner benefits. Hm…

  9. bravo369 says:

    i don’t have a problem with it as long as students aren’t FORCED to open an account. I don’t want to hear about how kids accidentally overcharged. You don’t accidentally overcharge anything. Keep track of your spending, your credit limit and you wont have a problem. Paying your bills on time helps too.

    also, one thing to consider is that when i was in college, student ID’s were used for everything. Swiped to get into buildings, checked at the library, at front desks, when making student purchases so making the ID a credit card is pretty much making kids wave it around everywhere they go. not very secure.

  10. nglatt says:

    My school does this and its awesome. Our IDs are only linked to the debit account when we sign-up. TCF Bank is really good about not misleading students. The interest rates and fines are totally out of control, obviously, but they pour money back into the university. Our athletics enjoy better fan support and the bank hands out money and prizes to students constantly for having school/bank spirit, regardless if there the student has an account. I think this system is great. Students need to be responsible for their own finances. We’re talking about intelligent 18-24 year olds here.

  11. alstein says:

    I have no problem as long as students aren’t required to be charged for/use the account. Then again, it makes losing your student ID a lot worse.

    Usually IDs have meal plan money on them now, this is an extension of that.

  12. DrGirlfriend says:

    This seems like it compromises security for these students. As was mentioned above, ID cards are already used on-campus for so many things – if you lose it, it’s already bad enough without it also being your friggin’ debit card.

  13. Xay says:

    While I was at FSU, you were required to have your student ID as a debit card if you wanted to receive financial aid via EFT. If you wanted to use a different bank, you could only receive a paper check – which usually came 1-2 weeks after the direct deposit was issued. Thankfully, my current school doesn’t tie any financial aid benefits to the student ID/debit card option and I don’t use it.

  14. Eilonwynn says:

    I’m at a university in Southern Ontario, and we have an odd, hybridized system. We *can* put money on our student card, which then acts like a debit card at most places on campus, as well as a few restaurants in the area – if we use it, we save 10-15% (an amount approximately equal to the tax we’d pay), and if we don’t, nobody really cares. It’s not associated with any bank, and it started out, iirc, as a crisis in the meal plan situation – they wanted to close a number of the dorm’s individual cafeterias. Additionally, as they are forever telling us, parents can load the card with a credit card online.

  15. Eilonwynn says:

    (ps: if it’s lost, the funds are recoverable provided it’s reported)

  16. MsFeasance says:

    My school does something closer to the gift-card system: you load up your student ID from a credit or debit card of your own choosing, and use it in vending machines around campus, as well as in a lot of local businesses. There’s also an ATM-like machine you can use it in, but almost no one does that. Not enough money? DECLINED. Period. None of this BS overdraft and fees system.
    I’m not sure what this does for fan support for athletics, but since administration can afford to pay the football coach $4 million a year, I’d say that the system’s working out just fine for them.

  17. qwickone says:

    When I was in school (UVA 05), your student ID doubled as a pre-loaded debit card, but it wasn’t connected to a bank and you could only use $5 more than you had. After that, it just wouldnt work until you reloaded. I thought that was great. This sounds like a disaster for students.

  18. chubba-baby says:

    it’s only a matter of time before the fees associated with overdrafts, etc. are hidden into the tuition & “fees” for the university semester- and then rolled into the student loans?

  19. chubba-baby says:

    @chubba-baby: er- that’s not meant to be a question.

  20. Buran says:

    My workplace (a university) is offering this. It always gave me bad vibes, and I’d rather use my regular credit card to pay for my lunch since I can easily fight fraud if I drop the card and someone uses it in the few minutes before I can report it lost. They try to entice people to sign up with discounts, but for the small amounts I pay (and not even every day) to buy a lunch, it’s not worth it.

  21. mac-phisto says:

    the worst part about this is not the fees – it’s the information a thief could obtain if your card is lost/stolen. the mag stripe on a student ID contains a lot more information than what you would find on a credit card.

    when i was at penn state, they were toying with rolling this out. i believe they were looking to partner with the credit union that serviced students, faculty & alumni (& you could open an account for $5).

    when i was a student, this was a hot issue. now if someone stole my card, they had my meal money (ID cards were used at the university dining halls), my bank money (via the debit option), my laundry/mad money (our IDs also had a smartchip embedded in them that was used in vending machines, laundry machines & even at some local merchants), not to mention my SSN (since that was our student ID), my birthdate, my address, access to my dorm, specific computer labs, etc.

    so basically, i could become the poor, smelly guy eating out of garbage cans downtown all b/c i got a little drunk & left my wallet at a bar. imho, there’s something to be said for isolated systems.

  22. rachaeljean says:

    I went to PSU when the whole One Card (is that what it’s called? Sounds right but I can’t remember… it was a few years ago, yay class of ’06!) thing came out. There was a pretty huge student protest thing over by Park Blocks I think, and lots of flyers and dissent etc etc. But, the thing is optional… the main advantage is that you could access your finaid money NOWNOWNOW instead of waiting for a check like students from time immemorial have done. I think I was automatically ISSUED a card, but had to sign up for the cards website and then set my finaid preferences to “CHECK IN MAIL” or something to that effect.

    It definitely does suck pretty hard core though. =/ I’m surprised that students are still fighting it though – go them! And happy to see my alma mater on the Consumerist! :)

  23. tinmanx says:

    My college had the ID/Debit card deal, but it was optional. There was a banker from Citi Bank that signed up students during the orientation. I remember a girl asking “who is going to put money in it,” and the banker with a look of disbelieve replying “uh, you do.”

    Just be glad it’s not a credit card. Not that there is a shortage of those around campus.

  24. rachaeljean says:

    I guess I didn’t make that very clear at all – it BECAME optional to get the $20 non-credit card student ID because of the student outrage. Protesting works, fight the man! :)

  25. Peeved Guy says:

    @nglatt: I looked up oxymoron in the dictionary and saw this: “We’re talking about intelligent 18-24 year olds here.”

    Now, git off my lawn!

    // just kiddin’

  26. CarlR says:

    I tried to get all up-in-arms about this, I really did. But (with the exception of the comments from one person above) it seems these programs are all completely voluntary. So I have a hard time screaming “injustice” when someone chooses to sign up for and use an account and then gets charged because they couldn’t be bothered to keep track of their balance.

  27. dorianh49 says:

    Okay, guys, I can’t believe no one’s addressed this yet:

    “The banks cash-in when students like Brad Vehafric, a Portland State junior, accidently overcharge their account and get hit with $150 in fees for buying a cup of coffee.”

    We absolutely need to figure out how to “blame the victim” for this one. First of all, he should be monitoring his account by calling the bank every 5 minutes to make sure he won’t get overdrawn. But, more importantly, he should not be drinking coffee. He should be drinking tea, except tea has caffiene. So, he should only be drinking hot water. Except hot water can leech lead out of pipes, so he should be drinking cold water. Except cold water has all kinds of pharmaceuticals in it, so he should just drink his own urine. Then he wouldn’t have been overdrawn!

  28. anonymousryan says:

    My sister, who is hardly fiscally responsible, got sucked in with some of this stuff. She opened the account because the university will deposit your financial aid directly into your account as soon as the funds are released, making it convenient. However, on the card you can use the debit card as debit (entering your PIN) and still over withdrawal your account, according to her, at least. She ended up $300 in the hole for a couple packs of cigarettes.

    In the end, she’s responsible for not knowing her balance, but the banks are totally preying on the irresponsibility of university students.

  29. azntg says:

    My school (Hunter College/CUNY), a public 4-year city college does maintain an internal debit card system. Currently, it can be used for priting, photocopying and bookstore purchases. Very recently, they have been experimenting it for meal plans and for one or two vending machines. It’s of absolutely no use outside of the campuses or with other colleges within the CUNY umbrella.

    And I thank god it’s that way. I’m not exactly fond of the idea of my Hunter ID card doubling a Visa/Mastercard debit card! I have several debit and credit cards on me for that purpose.

  30. clnclarinet says:

    The University of Pittsburgh has partnered with PNC Bank since at least 2001 (when I started). I ended up getting a bank account with PNC because they have great free checking and savings accounts available for students, I didn’t find anything shady about it. I didn’t get my ID card linked to my checking account as a debit card though– I didn’t see the point in having a debit-only card when I usually had my debit/credit card with me too.

    Pitt also has a gift-card like “Panther Funds” system that is also linked to your ID card. Parents could load it up online or mail a check and then you could spend the money at the dining halls or some retailers and restaurants around campus.

    This tended to confuse new students, though– I worked at the book center for a while and we could take Panther Funds but not debit cards and invariably would have to re-explain the 2 different things you could have on your card to either the freshman or their parents to figure out which one they had and were trying to use.

  31. Dave says:

    At Florida State it’s still the same way as Xay described it, but the checks usually come in the mail 3 or 4 days after they’re disbursed to the FSU cards.

    Thankfully at FSU they’re not pushy about having to open a SunTrust account when you first get your ID. Of course, the SunTrust branch on campus is right next to the FSUCard place, but I never got the hard sell.

    Interesting to note is that FSUCards don’t have a Visa logo on them, though they’re functioning as a debit card. That sometimes makes it hard to get places in Tallahassee to take them.

  32. Snarkysnake says:

    My daughters college (Dalton State College,Dalton Georgia) does this and after speaking with one of the business managers about this very article,I can tell you that is most definitely mandatory. Also, the fee schedule for the company that they use (Higher One) is downright abusive.

    Try these on:

    9 Month Inactivity Fee with money in OneAccount
    Inactivity fee charged after 9 months of no transactions.

    So they get use of your money for the better part of a year and THEN charge you for taking it out. Bank robbery in reverse.

    Non Higher One ATM Transaction Fee
    (includes all withdrawals and inquiries)

    $2.00 This is a license to steal.Higher One atm’s are on campus. You can’t easily drive there for a run of the mill withdrawal.

    Declined Transactions at Foreign ATMs: If you attempt to perform an ATM transaction at an ATM not owned by Higher One and it is declined, there is a fee for attempting the transaction. To avoid this fee, check your balance online and use Higher One ATMs for your cash withdrawal needs.

    This means that your kid is now paying for poor maintenance at other banks atm’s. Nice

    Here’s my favorite. Kick ’em while they are down:

    Legal Services: You probably won’t need legal services via Higher One, but if you do encounter a condition in which certain records are subpoenaed, or wages that are direct deposited into your OneAccount are to be garnished, then you will be charged for the legal services.

    Anyway,these fees go on for a couple of single spaced pages.You get the idea.

    Dalton State (and other colleges that do this) should be ashamed.I also read where the AG in New York State is looking into the “arrangements” that these banks have with these fee-trap companies that are on campus trying to lure the kids in.I hope that he shines some light in the dark corners where these cockroaches hide.

    BTW- Flamers,extinguish your torches now. This Higher One program is mandatory at most schools that have them as a vendor.So no blaming the victims.

  33. thelushie says:

    They have this where I went to graduate school…Marshall University. I found it convenient but I read every single word about the fees. Yeah, I have alot of distrust with universities. If I was sitting in the financial aid office with freshman (like at the beginning of the year where it seemed it was all freshman and graduate students) I would give them a short “Why we read terms and conditions on the One Card” lecture. I actually got thanked by some of them. They had no clue.

  34. @ChuckECheese: “I wasn’t aware that colleges were cash-strapped. Endowments are at an all-time high, as is tuition.”

    Endowments are high for the top schools. Lower-tier schools don’t have that kind of money, and get pressured to drop tuition because “endowments are at an all-time high.” (Now, what that tuition money gets spent on, that’s a legitimate topic to go all “what the hell?” about.)

    Public schools are suffering right now, especially community colleges, because they’re counter-cyclical but hugely cash-constrained — whenever the economy tanks, enrollment (especially at community colleges) rises as people take the opportunity to retrain. Unfortunately, since they’re state-funded, that’s also when the state starts looking to slash the budget and cut non-essential services. And it’s ALSO when the students can least-afford to absorb rising tuition costs.

    I teach part-time at a CC and the veterans tell me we’re always flush with cash when we have hardly any students because the economy’s booming and a high school diploma can get you $10/hour at monkey jobs and $20/hour if you have something resembling schools. And then the economy tumbles, tax revenues drop, and we lose all our funding just as our enrollment doubles.

  35. BugMeNot2 says:

    Oregon State University is exploring this and seeking input from students (and others):

    “It is important to us to know if OSU students would welcome this expanded functionality on their ID card. Please tell us what you think by responding to a short survey at the link below. The survey only has 7 questions, and should take no more than 3 to 5 minutes.

    “The survey will be available until April 11th.”


    I think Consumerist readers should take the survey, but maybe you should copy and paste the link above instead of clicking on it.

  36. BugMeNot2 says:

    Oregon State University is exploring this and seeking input from students (and others):


  37. @Eyebrows McGee: “something resembling schools” = something resembling skills. LOL

  38. mac-phisto says:

    @Snarkysnake: incidentally, every bank i know of charges for “service” (bank executions). the charge is typically >$50.

    but yeah, those fees suck. especially the “dormant fee” since it strong-arms you into using their banking services.

  39. Nissan288 says:

    When I signed up for the one at Upenn I didn’t have any problems at all. It was an optional program with PNCBank and once you had your Penn card you had to take it to the bank to activate it. In my immature mind I thought it was hilarious I used my school ID on Vacation to pay for food.

    Additionally, when I overdrafted on accident (Direct Deposit didn’t hit my account on the day it was supposed to), PNC waived the fee, in contrast to Bank of America, who berated me as a typical college student who doesn’t keep track of his expenses, even though it was because I hit an extra 0, withdrawing 1000 instead of 100…bastards…

  40. DePaulBlueDemon says:

    DePaul University in Chicago does this with TCF bank. My student ID is co-branded with TCF and I can use it to withdraw money from TCF…

    Students got “free” DePaul University sweatshirts and backpacks for opening a new account.

  41. ElizabethD says:


    Hey, Chuck — an endowment is not cash. Far from it. By definition it is a fund that sits and (hopefully) earns interest. You’re never supposed to — and often, by the terms of donors, not allowed to — draw down the principal. The institution annually assigns a percentage of the interest (generally up to 5.5%) to augment the annual operating budget. It’s not a big pile of cash to be plundered (recipe for bankruptcy).

  42. pal003 says:

    Bad, Bad, Bad Idea.

  43. Angryrider says:

    I already use my card to pay for books, and now there’s consideration of turning it into a real debit card. Bull.

  44. magus_melchior says:

    @SVreader: Methinks that’s the “reneg from the agreement with bank” fee.

    We probably agree that the university ought to eat that sort of cost because they agreed to a questionable deal in the first place, without at least talking it over with students.

  45. This is wrong on so many levels. I was in school when we could first put a balance on our student ID to use in on campus, but there was no credit or overdrafts, it was just a way for parents to give money without it going for alcohol.

  46. @ElizabethD: Thats the issue, schools arent spending endowments more then 3-4% (below the legal requirements for other types of trust). Why does my school need half a billion in the bank when kids are having to work two jobs to pay for college.

  47. Buran says:

    @Nissan288: I’m surprised it let you. I once tried to withdraw something insane like 1,000.00 because I didn’t realize at the time (mind wasn’t watching the fingers) you didn’t have to type in the cents. I got a message informing me I was over the limit of $300 per day, rolled my eyes, and got my $100. I’m surprised you got $5k out of an ATM.

  48. riverstyxxx says:

    This reminds me of elementary and high schools putting in soda machines and serving fast food for lunch, and who can forget McDonald’s rewarding honor students with a free big mac?

  49. mac-phisto says:

    @ElizabethD: here’s an interesting (but looooooong) essay about how endowments were earning ~10% (adjusted for inflation) during the 90’s, but the spending rate was ~5.5%. seems a little criminal to me. –> []

    then, on the flip side, i remember reading an article recently (though i can’t find it) about how some colleges/universities were plundering older endowments & utilizing their funds for general expenditures not intended by the original donors. i wish i could find that link – it was an interesting article that did a good job defining the “who’s money is it” debate.

    ahhh, the politics of academia. i miss the bubble.

  50. cosby says:

    My school(VCU) id doubles as a wachovia debit card if you choose to tie it to an account. I don’t know of anyone that does.

    It also works as a smart card to get into buildings after hours and you can put money on it for buying food. The account for buying food is different from the atm side as well.

  51. digitalgimpus says:

    I had to pay $X every semester for a meal plan living on campus, a portion of which was just in an account for extra cash… forced to put it there. They also kept pushing for more money to be put on your account every damn time tuition was billed etc. etc. warning parents of the hazards of being low on money, and carrying cash.

    By the time I was done with college, I broke $1k. I think I spent $5 one time. The bursar’s office had to review my account before they could pay out when I was graduating.

    I know many who were foolish enough to spend it as if it were to rot if it was just left.

    With me they earned some interest on the cash over 4 years. With many they earned an extra $1k+ because people didn’t feel it.

    Not sure how turning Student ID’s into Debit cards with banks is different from schools handling it on their own. Both are about deception and making a buck.

  52. Jeepman says:

    “Forced”????? Do they hold a gun to your head? Do they put you in thumbscrews? Do they kidnap your pet gerbil and hold it for ransom? Ummmmmm ….. NO! You are NOT forced to do this. If you are dumb enough to do it without understanding what it does, how it works, and what the benefits and pitfalls are you deserve what you get. ENOUGH of the victim mentality. There are choices and consequences – you make the choices and YOU enjoy/suffer the consequences.



  53. D-Bo says:

    This country really needs more debt riddled young people.

  54. Orngbliss says:

    @oakie: lOVE IT!

  55. Hawk07 says:

    My school did that when I got there in ’02. I didn’t think anything of it. It had two magnetic strips on the back. One was for access to buildings, the other for debit transactions.

    It was no more or less secure than any other debit card out there. I used a handful of times, but I didn’t like the bank that sponsored it (Wells Fargo), and I got legit and got a real credit card after an embarrassing incident where both of my debt cards got declined trying to buy $4 at Sonic. Anyways, credit cards were a lifesaver in college. Never once have I ever paid a late/debt/random fee and am otherwise a great deadbeat customer to the CC companies.

  56. ChuckECheese says:

    @ElizabethD: So, in the example of my grad school, 5% of $4,746,000,000 is about $237,300,000–and they still pester me for money 4x/year, and they don’t give full scholarships to people who can obtain financial aid.

    If Eliot Spitzer could smuggle a few grand to his, um, tutor, I’m sure Washington University in St Louis (and a few others) could scrape together virtually free tuition for a large number of students. In no way–not in facilities, resources, or even in the cafeteria–was this insane amount of money reflected in my education.

    @Eyebrows McGee: You make excellent points, especially about the countercyclical nature of community-college funding. I suppose I should have thought for a moment about public institutions, although I still suspect at least some of them too have considerable endowments hidden in the cellar, only permitted to be spent on highly specific things (sports).

  57. @ChuckECheese: Some public universities certainly do. But for the most part, the luxury of ginormo endowments is limited to a couple dozen very well-known schools (public and private both).

    But it’s typically the flagship state Us that have the big money, and that’s where the sons and daughters of the upper middle class who can afford college anyway end up. The secondary state-system schools are typically chronically underfunded, and serving categories of students who have to work much harder to make tuition. And it’s self-reinforcing, since people who donate to schools (lawyers, doctors, barons of industry) tend to come out of these “name” schools and donate to them … not so many millionaires donating to Local Community College or Small State U.

    Oh well. I guess it’s a pretty screwed up system generally. One of my profs at Notre Dame used to rant that if Jesus turned up tomorrow, he wouldn’t be saying, “How’s your endowment doing?” but “Why in the name of ME aren’t you educating more poor people with all that cash?”

    (And woohoo, go Bears!)

  58. Amalas says:

    My community college does this. My student ID is a MasterCard debit card. Laaaame….

  59. HungryMohican says:

    I’ve worked in student accounts & financial aid for over 15 years. There are very specific regulations related to issuing refunds of federal aid funds (aka Title IV) to students via cards. To see the regs in a (somewhat) readable form check page 12 (or 4-32) of the pdf here: []

    In summary:

    – Schools can’t force students to use the card option to receive their aid refund.
    – The balance of the card must be able to be accessed as cash.
    – Fees may be charged, but only under certain conditions (such as the student opting to use an ATM other than the one associated with the card, however an ATM from the bank on the card is expected to be nearby)
    – The cards should be free when issued.
    – Funds must be FDIC insured.
    – Schools may not draw back funds previously transferred to the card without written permission from the student (unless to correct an error in the transfer of the funds).
    – The card may not be a charge card, nor may it be converted to a charge card after it is issued. It may also not be linked to a checking or savings account. It is meant to be stored value ONLY (like a gift card).
    – Access to the card cannot be contingent upon the student’s enrollment or other affiliation with then school.

    Ultimately the school is responsible for making sure that these arrangements comply with federal regulations. If your school isn’t following these guidelines point this information out to the school’s Director of Financial Aid. If that doesn’t work, contact the Department of Education and file a complaint.

  60. ehlaren says:

    @bravo369: At the school i went to you weren’t “forced” you just had to specifically call/mail them to decline it or you automatically got set up for it. Of course, you only found this out if you read every minute detail in the gobs of information they gave you. A lot of people didn’t pay attention to a lot of stuff since the college was essentially blasting out the fact that you had to get this card, it was just like your old one, no worries, and if you didn’t get it you were screwed.