4 Disturbing Ways Big Banks Have Turned Colleges Into Money-Grubbing Institutions
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The inherent message and ramifications of this policy for students is clear: the need for revenue is real and we have no problem passing this burden on you.
The trouble isn’t limited to public universities alone. Some of the top liberal arts colleges in America, including Skidmore, Gettysburg and Kenyon, have adopted a different route to raising revenue: Rather than privatizing housing outright, these colleges have instead established tiered housing fees, which charge students more to live in certain types of student accommodations. At Kenyon, where tuition, room and board cost $54,760 per year, students can choose to live in new apartments rather than traditional residence halls, if they have the ability to fork over an extra $500 per semester. Inevitably, this policy results in a concentration of wealthier students in nicer facilities, while relegating modest-income students, who can’t afford to pay the fees, to lesser housing options.
The tiered housing policy is not only unjust, it also undermines the responsibility of higher education to equip leaders to explore diverse perspectives, understand the multiplicity of human cultural expression and experience social emotional learning—a process of learning and developing self-awareness, social mindfulness, relationships skills and responsible decision-making. With these policies in place, there is no doubt that colleges and universities are overlooking their obligation to breed global citizens that will benefit democratic engagement in civic life. And the price for that shift will eventually be paid by our society as a whole.
2. The Consumer Body
If reaching for efficiency through housing wasn’t enough, some colleges and universities are now transforming student ID cards into prepaid debit cards, thus profiting from student spending through unique checking account and debit card deals.
According to a recent report, " The Campus Debit Card Trap," by the U.S. Public Interest Research Group, nearly 900 colleges have partnerships with financial institutions that attach bank products to student IDs. The report finds that banks and financial institutions now influence and control federal financial student aid distribution to over 9 million students by connecting checking accounts and prepaid debit cards to these IDs.
For quite some time, federal student aid was disbursed via check with no cost to access the funds; now, due to these new financial deals, students pay fees to access their student aid, including fees for activation, ATM fees, overdrawing fees, per-swipe fees and in-activity fees. According to SEC filings, Higher One—one of the largest integrated financial aid disbursement services companies—made $142.5 million in revenue in 2011 through extracting fees from student aid disbursement cards.
To date, 32 of the 50 major public colleges in America have brokered deals with banks to issue ID cards that act as debit cards. For example, Huntington Bank paid $25 million to co-brand and link its checking accounts with Ohio State University student IDs. At the University of Minnesota, school officials agreed to allow TCF Financial to link ID cards as debit cards. In turn, the university will receive $1 million in revenue a year, as well as a $2 million signing bonus. And retail giants such as Walmart are also cashing in: Walmart is currently marketing its Student Money Card, backed by GE MoneyBank, on college campuses. In most cases, these cards also carry hefty student fees for activation, while offering minimal consumer protections.
This illuminates college and universities' intentional strategy of prioritizing new revenue streams at the cost of further burdening students of modest means—the price tag of college admission as well as full completion of one’s undergraduate study. More and more, students are not treated as future leaders, but as prized consumers of luxury products. It’s worth asking: are colleges today nothing more than tourist attractions designed to entice foreign students and wealthier families? It’s beginning to look a lot that way.