Students: Be Aware of Banks on Campus - NerdWallet
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Students: Be Aware of Banks on Campus


We have seen the tactics before: Apply for a Credit Card, get a free football. Sign up for a checking account, get $100 deposited into your account. These offers target campuses for a reason: students often do not realize the fees and penalties associated with these accounts – generating big profits for banks. While regulation enacted in 2009 sought to limit the activities of credit card companies on campus, not all banking services or cards are limited by these laws.

If your school refunds your financial aid with a prepaid debit card, you could be one of the millions of students paying fees because your administrators want to save money and outsource responsibility. Tuition is already fantastically expensive, and with a few handy tips provided by NerdWallet’s experts, you can avoid extra fees and make the most of your student dollars.

Administrators save money while exposing students to fees

Take the case of Higher One, who’s OneAccount and OneDisburse services offer checking and financial aid reimbursement to over 800 schools nationwide. Based on NerdWallet calculations from their financial results, Higher One earned, on average, $44 in fees from each of the 2 million students enrolled in their OneAccount program.

So why would school officials enter into agreements with companies that generate profits from their students?  Because the schools save money. By outsourcing financial aid reimbursement, schools subcontract administrative work and save money at the expense of students. Perhaps worst of all, revenue-sharing contracts, like the one between Higher One and the University System of Georgia, enable schools to share in the profits from fees.

CEO Dean Hatton summed up Higher One’s sales pitch in a 2011 earnings call: “When we sell our product, we’re selling it to the campus CFO or the chief business officer…The business officer is not in the business of buying checking accounts for students, [he’s] buying a service that will enhance campus efficiencies.” It’s no surprise that companies like Higher One are looking for a profit, but school administrators should not be choosing efficiency over their students’ best interests.

Higher One offers resources on its website to help students avoid its fees, and its services do offer a convenient solution for students without easy access to banking. Additionally, similar products exist from Blackboard, PNC, Sallie Mae, and Nelnet, all with their own unique advantages and disadvantages. With increased competition in recent years, does this signal opportunity for students, or for the companies targeting college campuses?

“In a period when financial literacy is at all-time lows, it is irresponsible for school administrators to expose students to these fee-based banking services,” says Joseph Audette, VP of Education and Financial Literacy at NerdWallet. “They should be protecting the interests of their students, not pursuing the most cost-effective solution for the school.”

Keep your student dollars in your wallet

Students can keep checking and financial aid reimbursement fees in your pocket with a few easy steps:

  • Know your fees. Higher One clearly outlines its fees and how best to avoid them. Being educated and proactive with your personal finances is the best way to avoid fees.
  • Open a student checking account. Perception aside, most of the major banks still offer free student checking. The Chase College Checking Account offers no monthly fee and access to over 15,000 ATMs nationwide.
  • Have past banking trouble? Look into second chance checking accounts from Wells Fargo and Los Colinas Credit Union to get your credit back on track.
  • Get your financial aid refund for free. Request your reimbursement through ACH transfer or paper check. Higher One offers this free of charge to students.

With a few basic steps, students can take control of their personal finances and avoid unnecessary fees – skills that will serve them well through college and beyond.