Debit Cards And Your College: A Wrong Relationship?


Cash strapped colleges frequently look for support from the business community in exchange for free advertising or consumer access opportunities.

student i.d.For example, it isn’t uncommon to find Pepsi machines on some campuses which might be allowed while forbidding competing (namely Coca-Cola) products from hawking their wares. In exchange for exclusive access, the local bottling company signs a contract with the university and offers the school an annual fee. Also, take a look at the scoreboards in many college gymnasiums and you will see that it is circled by ads — clearly, advertising to support higher education has become a way of life.

Some colleges have carried the whole advertising/marketing arrangement one step further by making college identification cards do double duty — in addition to providing an important form of i.d., many schools allow these cards to serve as debit cards. Moreover, some schools are receiving a nice payout for their exclusive banking arrangements.

Not everyone thinks that allowing banks to have easy access to students is the right call. On the Higher Ed Watch blog, which is part of the New America Foundation, at least 127 colleges and universities have established banker-id partnerships. The University of Minnesota is one of the more aggressive schools in their partnership, having recently inked a deal with TCF Financial which will pay the school $40 million through 2030.

TCF Financial has seen a $50 million rise in deposits in the areas surrounding the school’s two largest campuses, attributing most of the increase to a rise in student deposits.

Higher Ed Watch argues that most arrangements give students no choice to switch to another bank or, if they do, a fee is charged for this service. In addition, studies are showing that many students are just learning how to handle finances themselves and are prone to overdraft charges which can cost an average of $35 per transaction. With little money to spare, most college students simply cannot afford to be hit with additional charges including ATM fees.

While the trend to banker-id student cards continues to grow, not every university thinks that they are a good idea. At Ohio State University, the school created its own no-fee debit system to handle student spending. Unlike a bank-issued debit card, if a student doesn’t have funds available, his purchase is declined — no money, no purchase, but no overdraft fees.

Further Reading

College debit-ID card deals draw scrutiny

Disclosure: Some of the articles and links on SayCampusLife are, in fact, for student debit cards. Please use discretion when seeking any type of consumer debt or financial planning arrangement.


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