New college debit card has pros, cons

October 12, 2010 3:57:12 PM PDT
Credit cards and college students can be a recipe for financial disaster. And while you may have warned your college-age kid about the dangers of plastic, you may not know about a different kind of debit card on campus. The card is tied to a student's financial aid or the refund money that's due the student, but the fees are raising some concerns about the cards.

The debit card is issued by HigherOne, which teamed up with colleges and universities to help distribute financial aid and refund payments to students.

The cards give students easy access to their money, but they do come with fees.

At the University of Houston, it is not hard to find students with a HigherOne debit card.

"When you get a refund check, you have the option of sending it to there, and it goes to the HigherOne card, so if you have money left over, it's yours to spend," student Nate Pineda said.

Millions of college students around the nation have the cards. They allow quick access to students' surplus financial aid money or any refunds they are due from their schools.

"It can be a good thing because it saves a lot of paperwork for the university, and it's convenient for the student," Houston CPA Bob Martin said.

Martin says the easy access to money can come at a price.

"The downside is there can be a lot of fees attached to this, and it can get students into a lot of financial trouble," he said.

Those fees include a $2.50 charge for using non-HigherOne ATMs and a $19 inactivity fee on accounts not used for more than nine months.

The cards are different from school to school, but in each case, there are ways to beat the fees -- if students choose.

"HigherOne will go ahead at no charge and send that money directly to the student's bank account wherever they choose, " said Gene Gillis, a University of Houston bursar. "Of course, obviously, they have to fill out forms and have that on file."

Gillis says the school was one of the first to work with HigherOne and believes it is a good service for students and the university.

"As with anything, being the first school to ever implement it, there were kinks that had to work out," he said. "But we have always found that HigherOne has been amenable to everything we have asked of them."

More than 600 schools use the HigherOne card, including the UH-Downtown and the Houston Community College network of schools.

Students don't have to get the cards. They could just get a check from their school for any excess money they students may have coming to them; the card just gets it to students faster.


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