Higher One faces scrutiny for hidden fees
Higher One Holdings Inc., the University’s choice for a refund option for students receiving financial aid, is under scrutiny, being blamed for taking advantage of students by charging hidden fees.
According to two people with direct knowledge of the matter, Higher One is near a deal with federal regulators that would end an 18-month investigation of overdraft fees charged between 2008 and 20011, the Associated Press reported.
“We do believe the claim is without merit,” said Lauren Perry, campus relations coordinator for Higher One. “The fee schedule is so transparent and out there for everyone to see. We’re a transparent company, so we have no hidden fees.”
Using Higher One, students face the possibility of paying charges to access their money, including a $2.50 fee to use the card at a non-Higher One ATM. Higher One ATM’s are located on the campus in Mendenhall Student Center, Jones Residence Hall and on the medical school campus near the cashier’s office. In addition, a $10 charge monthly charge is placed on accounts that have been inactive for six months.
Shoba Lemoine, Higher One’s marketing representative, said the company’s contacts the account holder via email to ask whether they want to keep the account open. She said this contact happens multiple times before the fee is charged.
Other fees include a 50-cent charge for running the card as debit instead of credit at merchant stores and a $20 card replacement fee if it is lost or stolen. Lemoine said the replacement fee is a charge that occurs at most national banks.
“Our fees are low cost compared to other low-cost options,” said Lemoine.
Started by a college student in 2000, the company markets bankcards and checking accounts to college students through exclusive deals with colleges and universities. The U.S. Public Interest Research Group Education Fund, a student advocacy group, reports that the company has card agreements with 520 campuses that enroll a combined 4.3 million students.
“We’ve had a great partnership with ECU since 2005,” said Lemoine. “Students appreciate the service we provide.”
However, there are mixed emotions around campus as to whether students like the Higher One service.
“I used to use it,” said senior English major Devon Falls, “but I don’t use it anymore. It’s terrible.”
Falls said he went to the store with money in his account, but when he went to pay, the money was gone.
“I tried to call them (after the incident), and I got an automated response,” he said. “There’s not an office in Greenville, there’s not a bank in Greenville… There’s not accessibility.”
According to the University’s website, when receiving a refund check from financial aid, students are given three options: Higher One, where the money is disbursed in the student’s ECU Account the day it is received; depositing the aid at the student’s bank, which takes two to three days; or have it mailed as a paper check, which takes five to seven days. Opting to send his refund money straight to his account, Falls no longer faces issues with Higher One.
“It’s so much better,” he said. “When I go to the bank, I can see someone and talk to someone. I can’t do that with Higher One.”
Starr Chauvaux, a senior biology and chemistry major, said she also chooses the direct deposit option to avoid using Higher One.
“My dad didn’t want me to have one, because he was unfamiliar with the company and didn’t know exactly what it did,” said Chauvaux.
Chavaux said she does not like the fees that accompany the card, like the debit fees, and the ability to only take out $500 at a time. “I’m happy my dad didn’t want me to use it, especially with what happened last year at University Book Exchange (an incident when Higher One credit card numbers were stolen),” she said.
But Junior health service administration major Betsy Wentworth said she uses the card without any problems. She said she avoids extra fees by using the credit option rather than debit at the store.
“It’s easier and more convenient to receive my refund money,” said Wentworth.
David Barges, a senior hospitality management major, said he used the card during his freshman year after money was refunded to him by the University for dropping one of his classes.
“I didn’t notice any extra charges to the card,” said Barges.
To help students become aware of the fees, the company’s website includes a video that shows students how to avoid some of the charges, focusing specifically on the 50-cent charge when the card is used as debit instead of credit. Also listed on the website is a link to OneforyourMoney.com, Higher One’s online community for financial literacy.
Along with a fee schedule available on the Higher One website, Lemoine said that when students choose the company for his or her refund, a box pops up to inform the students of all the fees charged. Students must read and agree to the terms before choosing the option.
“It’s really kind of unorthodox, it’s not like traditional banking,” said Lemoine. “We wanted to do this to educate students.”
Perry said schools choose Higher One to help streamline the process of disbursing financial aid money, and eliminating the paper and postage cost.
“The primary benefit of using the card is that we provide the students with a choice for checking account options,” said Perry. “It’s safe and secure, and free to receive.”
The choices, listed on the website, allow students to select between the free OneAccount option, the $5.95 per month One Account Flex account, or the $8.95 per month OneAccount Premium.
The benefits of Higher One listed on its website include refunds available the same day they are released by the institution, the flexibility to use the card as Debit MasterCard, protection under the MasterCard Zero Liability policy, and online money management as the convenient features of using the card.
The university’s cashier’s office was contacted for comment but could not be reached.
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