Sweetheart deals let schools cash in at students’ expense

[Jahness]

Sweetheart deals let schools cash in
at students’ expense

Fri Mar 21, 12:21 AM ET

Americans have learned to be wary of offers of "free" credit cards arriving in the mail, no-cost vacations touted by travel agencies, and fortunes promised by Nigerian e-mailers if you only front them a little cash.

One exception to those come-ons, thankfully, has been your alma mater. Trusting your college is one reason you agree to donate money, slap a sticker on the back windshield and wear college colors during March Madness.

Now, however, scores of colleges are putting that confidence in jeopardy, all to garner a little extra money for their coffers.

The latest questionable practice, as USA TODAY's Kathy Chu reported earlier this week, involves at least 127 colleges that have teamed with banks to make student ID cards double as debit cards.

This arrangement works out quite nicely for the colleges, which generate revenue from the banks as high as $1 million a year. It works nicely for the banks, which get exclusive access to future clients, ones with a tendency to run up fat overdraft fees. But it's not such a great deal for the students who pay those stiff fees (about $3 for every $1 overdrawn) and are steered away from less costly banking options.

Students should, of course, learn to use their cards responsibly, just as they should learn not to bounce checks. But colleges could do a far better job of teaching personal finance, disclosing the terms of exclusive deals with banks and making students aware of possible lower-cost alternatives.

The ID/debit card deals, which are being examined by New York Attorney GeneralAndrew Cuomo, are just the latest examples of college financial practices that might not be in the best interests of students or alumni. Among the others:

* Student loans. Investigations by Cuomo revealed that major colleges received financial benefits for touting lenders that didn't necessarily offer the best deals for students. Some of these exclusive deals were greased with "gifts" such as free computing services or outright bribes to college loan officers.

* Study-abroad programs. In a global economy, the need for students to explore the world is unquestionable. How some colleges handle study-abroad programs is questionable. Cuomo is examining whether some colleges received subsidies for steering students to certain travel providers. In addition, some colleges pocket the difference between a low-cost study-abroad program and the full, regular tuition students are required to pay.

* Donations. Some schools have been accused of steering donors' dollars to unintended purposes. A dispute at Princeton University involving a gift now worth nearly $900 million has gone to trial. A new group, the Center for Excellence in Higher Education, encourages donors to use their gifts to force colleges to become more accountable for their spending.

That's a worthy goal. If colleges were to become more efficient and cost-conscious, they'd be under less pressure to sign questionable deals with vendors. At a minimum, such deals should be fully disclosed and competitively bid.

In the near future, colleges now inundated with applicants will begin competing for a shrinking pool of high school seniors. It will not be an advantage to treat prospective students and their parents like ATMs.

http://news.yahoo.com/s/usatoday/swe...HQJ.fxxTQDW7oF

Copyright © 2008 USA TODAY

[Im The Truth]

They got that at Georgia State if I'm not mistaken now. I don't think the cards are unlimited but they do the potential to put folks in debt or give them a chance to handle money responsibly.

[Jahness]

Originally Posted by Im The Truth

They got that at Georgia State if I'm not mistaken now. I don't think the cards are unlimited but they do the potential to put folks in debt or give them a chance to handle money responsibly.

Greetings Im The Truth!

Indeed a lot of universities are using this system. It can be a positive ad a convenient way for the students to establish a good financial history, but too many times the students are not even aware of the rates especially overdraft rates. Students pay a lot in overdrafts fees which is automatic once the deduction is made. What happens a lot of times the database systems are not always up to date and so called accidental withdrawals are made and the banks acts as if it is usually the students fault. If the student protest hard enough they might be lucky to have the fee waived but most times it is not. I had to do battle with them enough times putting money for Taifa and I usually make direct transfers since we both use the same bank for convenience.

They tried it a couple of times with me and well you can imagine what i had to tell them about their thieving selves. When i know I made the transfer early enough on a weekday. Called my daughter to make sure she saw the transaction was completed and the money was in her account only when her monthly statement came she was charged for overdraft or when she checked her account at other intervals money was deducted from her. Well you know theyhad to give me my money back cause I am too poor to not miss a penny...lol

Thanks for sharing