Pressure mounts to align personal finances with college cards

With the cost of tuition on the rise and the threat of increasing interest rates on student loans, banks and colleges have found yet another way to make money off of students.

And it comes in the unsuspecting form of your student ID card.

Over 900 schools -- both public and private -- across the country are partnering with banks to provides campus ID cards that double as debit cards. Colleges market the banking option to students, ushering business to a particular bank. In exchange for the new, young customers, colleges receive money that amounts to millions of dollars over time. According to the U.S. Public Interest Research Group Education Fund (U.S. PIRG), among banks, US Bank has the most card contracts with colleges (52 campuses).

Recently Arizona State University signed an 11-year agreement with MidFirst Bank that is potentially worth over $4 million. According to the Arizona Daily Star, $15 will go to ASU for each new student account that is opened along with $2.50 each year the student is enrolled at the university. Four cents also goes to the university every time the card is swiped.

Not to mention the contract guarantees ASU a $1 million signing bonus.

Campus debit cards appeal to students because their cards can conveniently be linked to a bank account allowing students to swipe at various locations on and off campus. Students can save time and colleges can save money by allowing banks to disburse financial aid or campus refunds instead of doing it themselves.

Johnathan Ross, a senior film and media studies major at Arizona State University says he thinks the partnership is a good idea. He says it can benefit students by giving them “some new responsibilities and making them become more responsible with their money.”

Ross, 20, sees the positive but is skeptical as well. He doesn’t feel that schools keep the students’ best interests in mind. “They [colleges] may say otherwise, but I think they’re just in it for the money."

Because his time as an undergrad is winding down he doesn’t plan on changing banks, but he feels his peers will.

It may seem like a harmless deal where everyone wins, but a report issued last month by the United States Public Interest Research Group suggests otherwise. Among several of the concerns highlighted in the report, fees students face by using the ID-debit cards stood out most -- fees that would chip away at precious financial aid dollars stored in their accounts.

So far, some students who use the card have incurred fees for overdrafts, using the card at ATMs and for requesting balance inquiries.

Higher One, a financial firm with a presence on 520 campuses reaching over 4.3 million students, charges fees for PIN-based transactions, not using the account, and non-Higher One ATM transactions.

Although students can opt not to turn their ID into a debit card, U.S. PIRG says students are being pressured indirectly to choose the bank their college is aligned with.

“Many bank contracts require aid recipients to visit their website before they choose how to receive their aid,” Rich Williams, co-author of the report, said in a press release.

“They co-brand with the college which implies an endorsement.” He believes this doesn’t give students a fair chance to make an informed choice.

“I would not participate,” said Emmilyne Victor, a junior studying broadcast journalism at Howard University. Among other reasons, she doesn’t want to have to worry about the consequences of losing such a card. “What happens if I lose my student ID? Not only have I lost my ID but my debit card as well.”

She is quite comfortable banking with Bank of America. She opened an account when she moved from New Jersey to Washington, D.C. to attend Howard.

“I opened a student account with Bank of America. They don’t charge me for overdrafting my account,” she said.

Despite criticism, students around the country may continue to see their schools enter into contracts with banks. States around the country are cutting their budgets and schools are in search of ways to make up for the loss. Banking is a very personal matter and it’s ultimately up to students to do their research to make a decision that will work best for them.

Jordan Duckens is a Summer 2012 USA TODAY Collegiate Correspondent. Learn more about her here.

This story originally appeared on the USA TODAY College blog, a news source produced for college students by student journalists. The blog closed in September of 2017.