Higher One: The Student Loan Debit Card You Probably Don't Need

A debit card for your financial aid that you could use to buy food and booze? Hey, it could happen.

And so it has, as CNBC reports. The card is called Higher One, is the product of two former Yale students and garnered $75 million in revenue last year and is available at 700 universities.

The card acts as a reservoir for students' excess financial aid. Typically, schools return that money to students via check, but Higher One "streamlines" that process for students.

But there's a catch. The company charges $20 for replacement cards and $19 for inactive accounts. Customers are charged 50 cents when they use their PIN rather than swiping as credit.

The card has raised some eyebrows. "I don't like the fact that someone's taking money from money I borrowed," University of North Dakota senior Gerbert told CNBC.

According to Consumerist, the card's makers "say students can avoid the fees if they use the card properly" -- which, as the site cleverly points out, is kinda like depositing a check in the first place.

Comments

[healthanalyst]

02:27 PM on 12/28/2010

And the student loans are paid back with credit cards only. They screw you both ways.

[Katie Dee]

04:22 PM on 12/27/2010

Yeah the Higher One card is a total ripoff! Just get the money transfered to your bank account that's what I do...no fees!

[Nathan V]

04:56 PM on 12/26/2010

First off, if any student is stupid enough to pay fees like that then let them. It's high time someone give the proverbial slap in the face to people about how to properly manage credit. The $20 replacement fee is quite steep, though.

Inactivity fees, charging as "debit" instead of credit, and other such avoidable fees are made for suckers. There is little to no reason to ever pay those fees and this card simply take advantage of the lack of financial education in the school system the same way credit cards take advantage of adults.

This idea of "plastic over paper" is fantastic! Track what they spend, get it to them faster, and get them used to unnecessary fees so that they hopefully will avoid them as they mature.

Seriously though, who charges debit anymore and why?

[Ness27]

01:48 AM on 12/25/2010

Anytime you pay a fee for something you can get for free is a ripoff. I can't believe they are doing this to college students.

[Abby Meester]

07:31 AM on 12/24/2010

All one has to do is look at the fees and they'll realize its a ripoff.

[grod805]

04:12 AM on 12/24/2010

Are students really falling for this?

I'm all for student entrepreneurs but this is just a scam.

My financial aid already transfer excess money onto my bank account and I already have a debit card with my bank so I don't see why anyone would ever need this card.

[Jon Hart]

04:07 AM on 12/29/2010

At my school its not an option, it's the only way to get any refunds from FAFSA. I thought there must be some sort of law against this but apparently not. I've filed complaints to the financial aid department at my school but they don't care. Luckily I'm intelligent and I manage my finances very well but I know of plenty of my fellow students are going to mess this up.

[James Rocket]

05:27 PM on 12/23/2010

I have this card. I am starting at a local college, and they use Higher One as an option. I will try the service and see how well it works. I have read the terms extensively, and have spoken with a rep on the telephone.

If I pay for a purchase at a store by using the card as "credit" and signing for it (swipe-and-sign), there is no fee. If I use the card and enters a debit pin number for the purchase, there is a fee to me. I can only presume the Higher One bank charges stores for each "swipe and sign" payment.

Also, there is a limit on how much cash that can be withdrawn from the account daily ($500), as well as a limit on the dollar amount of transactions that can be conducted daily ($2,500, I believe).

They let you transfer money to the Higher One account from other accounts without a fee, however transferring money out of the account will elicit a fee. If you do not use proper Higher One ATM machines for withdrawal, there will be a fee. (Fortunately, a college across the street from me has a Higher One ATM on campus.)

I have a checking account with Bank of America. My financial aid refund will be coming to me in early February. With the recent threats by Julian Assange, I don't think I want BoA to have access to my money.

[Ddorsey]

08:13 PM on 12/23/2010

It's pretty disheartening that to earn and spend money in America and live a decent life, you pretty much have to submit to credit card companies, banks, and exploitative companies like Higher One. I remember a while ago there was an article on here about a man who tried to live without a bank account, and it was just sad. I'm also a college student with BofA, and I've been thinking along the same lines lately. Bank of America has pulled a lot of straws with me, and I'm counting on that WikiLeak to be the last one.

[Abby Meester]

07:34 AM on 12/24/2010

James, you're better off using a bank. A bank doesn't have all of those ridiculous fees. As for BOA just switch to a different bank.

[NYC-CatLover]

03:27 PM on 12/23/2010

Well if there was one thing this country was missing, it was the ability of college students to borrow from the government, spend it on booze, gambling, fancy car steroes and snuggies, then default on it and let the taxpayers hold the bag! Yay! *eye roll*

[southingtonian]

04:22 AM on 12/28/2010

Doctors have been doing it for decades.

[Meranda F]

03:14 PM on 12/23/2010

How do students do this?
It never really occured to me that I could do any of this, Mostly because it is shady , but still.....

[Mike HeXt]

01:23 AM on 12/25/2010

They don't see the money. They are in deferment. They don't know how much they're racking up.

The job at the end of the tunnel is their only vision.

[talksalot83]

02:24 PM on 12/23/2010

HigherOne says that it's like having a new checking account with a debit card, but how many banks charge $19 for an inactive account? You can "opt out" of HigherOne's card, but you have to wait and additional 30 days to get a check in the mail. If you want direct deposit to a different account (checking, etc...), you have to print out a form and mail it in. They certainly do not make it easy for students to opt out. And they mail the cards out during the summer to freshman so they're more likely to use it not understanding everything about the card.

I still don't know why the University of North Dakota had so many problems with disbursing excess aid when most people would get it direct deposited now anyway. I don't even want to talk about all of marketing they did when the cards were first given out at UND.

[julbar]

12:47 PM on 12/23/2010

Call me crazy, but the last time I looked, the green card from American Express is no debit card.