Who says pimpin’ ain’t easy? Colleges team up with banks to encourage student debt
By Chip Parker, Jacksonville Bankruptcy Attorney on Sep 21, 2007 in Florida, General Bankruptcy Information
In April, BLN reported that Sallie Mae, America’s largest student loan provider, fraudulently provides monetary incentives to schools pushing their student loans. Since Sallie Mae’s $2 million dollar slap on the wrist by the Attorney General for the State of New York, financial institutions and college administrators have been eagerly collaborating to find new ways to exploit young adults before they can learn financial responsibility. The latest idea will certainly spread across campuses like wildfire, shortly becoming an afterthought in the same vein as vending machines in high school cafeterias and corporate sponsored TVs in elementary school classrooms.
In what can only be described as a “match made in Heaven,” banks have teamed up with college administrators to provide a student identification card that doubles as a debit card with the college’s “financial partner.” In his latest BusinessWeek article, Dean Foust reports that TCF Financial Corp. has forged a deal with the University of Minnesota to provide an all-in-one ID card that will allow students to check out library books and extract money from one of the 12 TCF cash machines conveniently strewn about campus.
TCF has agreed to pay the university roughly $40 million to extend this relationship until 2030. Apparently, it’s expensive to keep those gophers golden, but the investment is a no-brainer for the bank, who has already reported that 80% of the students have pumped $50 million into new TCF bank accounts to take advantage of the combo-card.
Increased deposits is just the tip of the iceberg. The real money to be made off of the backs of students is in the form of ATM surcharges and overdraft fees that run up to $33 a pop. Rather than deny students access to funds that just aren’t there, TCF happily spits cash out if its machines, imposing a hefty penalty upon an already financially-strapped student population.
As Foust reports, “Banks and university administrators have become quiet partners in an array of financial arrangements that generate millions for both parties, from ID debit cards to co-branded credit cards.” For now, some universities, such as Ohio State University, are maintaining their integrity by refusing to partner with banks, but we all know it is just a matter of finding the right deal.
“Schools have become too vested in the finances of their students,” says Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars & Admissions Officers. “It’s unfortunate that there are colleges that have begun to view every point of contact with students as a potential profit center.”
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