As if the entire student loan industry wasn’t bad enough, there are new players trying to enter the field to take advantage of student borrowers. A few weeks ago I blogged about student loan debt-settlement companies. Here’s another one for you: student account debit card companies.
Increasingly, colleges and universities are outsourcing the management of student accounts and disbursed student loans to private companies. Instead of placing your loan disbursements into your student account, the funds are disbursed into accounts held by a specialized debit card company. The company then charges exorbitant fees to students- debit card fees, account maintenance fees, balance fees, etc, netting tens of millions of dollars in profits each year. What’s worse is that at many schools, colleges co-brand their own school’s name with that of the student account company, giving students the impression that the company is fair and legitimate, or even part of the college itself. This is remarkably similar to stories from a few years ago where college financial aid offices got a little too cozy with private student loan companies (and guess who paid the price then, too?).
It seems everyone has something to gain by taking advantage of young people who are just trying to get an education and get ahead in life. To read more about student account debit card companies, check out this story and this story.