Students take a swipe at debit card

Coast Community College District students expressed concern during a board meeting last week about a controversial debit card used to disperse financial aid.

Beginning this fall, students have the option of using the My Coast Colleges Card, which acts like a debit card, allowing them to access their financial aid to buy items at stores for a fee.

However, they say the 50-cent transaction fee is too high and accuse Higher One, the company in charge of managing the funds, of deceptive marketing practices to persuade students to use the card.

Kyle Murphy, a student at Golden West College, told the board that the fees associated with the card add unnecessary stress.

"There's no positive impact in having fees associated with accessing our funds for college," he said.

Students can also opt to receive their aid by check, either by mail or direct deposit to a bank account. No fees are associated with the checks. But the process often takes longer than use of the debit card, Murphy said.

"This is considered to be a fee-free option, but those who value our time know that four weeks or even eight weeks is too long to wait," he said about the check option.

Coast made the transition to Higher One after the financial company purchased Sallie Mae's Campus Solutions business, which the district has used to disperse funds since 2007. The district is locked into a three-year contract with Higher One, said Andreea Serban, vice chancellor for educational services and technology.

In August 2012, the Federal Deposit Insurance Corp. negotiated a settlement with Higher One, forcing the company to pay $11 million in restitution to roughly 60,000 students for alleged unfair and deceptive practices.

The FDIC found that Higher One was allowing student accounts to remain overdrawn for long periods and then collecting insufficient-fund fees when the accounts were replenished with money meant for tuition and other college expenses.

Serban likened the district's situation to an arranged marriage with Higher One.

"The district itself had no choice," she said.

Serban vowed to contact Higher One to discuss reducing the debit fees to 25 cents per transaction.

Students can also utilize the card as a credit card instead of a debit card to avoid fees, she said.

"We have a contract, but that doesn't mean we can't look at other options," she said. "However, absent lack of performance, we have to be careful in breaking a contract."

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