A recent report released by the New Jersey Public Interest Group indicted many colleges and universities for partnering with financial institutions in a way that could exploit students. The report indicates that over nine million students have bank-affiliated student debit cards. While such an arrangement is not necessarily unfair, conflicts of interest easily arise when schools have obligations to certain banks.
Student debit cards certainly can have benefits. At Penn, students can combine their IDs with their debit cards — conveniently consolidating two important parts of every college student’s wallet. In addition, by working with schools, banks can tailor their services to students at particular colleges or universities.
However, such programs need to be carefully monitored to ensure they are geared toward the best interest of the students.
By pushing their programs, schools create an anti-competitive climate in which banks can prey on trusting students. Even Penn’s partnership with PNC Bank, which was deemed benign in the report, receives heavy promotion during NSO.
As a result, banks can institute frivolous fees — such as per-swipe charges — with relative impunity. While this type of exploitation is bad enough, it is only made worse by the fact that financial aid disbursments often go through these same programs. Banks should not be in the business of making profits by skimming off students’ financial aid, and schools should not enable them to do so.
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