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The Daily Tar Heel

Companies criticized for debit card agreements that exploit students

CORRECTION: Due to a reporting error, a previous version of this article incorrectly said Higher One had a debit card agreement with UNC-Wilmington. UNC-W ended its agreement with Higher One in 2008. The Daily Tar Heel apologizes for the error.

Consumer advocates are criticizing some universities and financial institutions for student debit card agreements they deem exploitative.

But at UNC-CH, students can link their One Cards to their checking accounts without fear of hidden fees or pressure-sale tactics.

Chris Lindstrom, higher education program director at U.S. PIRG, a consumer advocacy group, said some students have their financial aid refunds tied to these debit cards, which makes it difficult for students to opt out of using the debit card.

“Higher One, as well as a company called Heartland, are probably the two biggest companies in terms of agreements where they are in control of the financial aid disbursement,” she said.

Higher One has a debit card agreement with East Carolina University.

“Students often receive these cards with school-affiliated branding like mascots, colors or student ID, and they just assume they need to go and activate these cards,” she said. “Once you activate the card, there are barriers in place that make it difficult to opt out and not have your financial aid directed to these debit card accounts.”

UNC-CH has had an agreement with Wells Fargo since 1999, giving students the option to link a Wells Fargo checking account with their One Card. Elon University, N.C. Agricultural & Technical State University, Fayetteville State University and N.C. Central University all have similar agreements with Wells Fargo.

Jim Clinton, the director of card operations at the UNC-CH One Card office, said the agreement with Wells Fargo specifically excludes the company from leveraging financial aid to get students to open a checking account.

“Wells Fargo does have that ability because they’ve done it with Texas A&M, but they’ve never done it here because we’ve never allowed it,” Clinton said.

Senior Morgan Manson, a business administration major, said she has had a Wells Fargo One Card Plus since she was a freshman.

“I was planning on getting a debit card, and when I found out I could get it linked to my One Card, I went with that,” Manson said.

Lindstrom said some school-endorsed debit cards contain fees, such as for using an out-of-network ATM or using a PIN number instead of signing for a purchase, that can cut into a student’s money.

“Most of the time, most people choose debit and put in their four digit code,” she said. “These debit cards are ones where the only way to avoid the fee is to not use it as a debit card. This can be pretty confusing to students who want to use a debit card in the way they are used to using a debit card.”

Wells Fargo does not charge any additional fees for using a One Card as a debit card.

Manson said she plans on opening a regular Wells Fargo debit card after graduation.

“Banks want customers, and college students are going to be great customers one day, so it makes a lot of sense from a bank perspective to try and get into the students’ wallets early,” Lindstrom said.

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