Woe, woe to America’s (financially illiterate) college students

Considering how much our society promotes college attendance, it sure does seem as if there’s never been a worse time to be a college student. From being smart enough to gain admittance to a college that charges $50,000 a year but needing someone to tell them it will be expensive to pay back all those loans, to being subjected to the fees a bank said it would charge them, our best and brightest are just so put-upon these days.

Here’s the outrage du jour, as explained in an AP story:

As many as 900 colleges are pushing students into using payment cards that carry hefty costs, sometimes even to get to their financial aid money, according to a report released Wednesday by a public interest group.

Colleges and banks rake in millions from the fees, often through secretive deals and sometimes in apparent violation of federal law, according to the report, an early copy of which was obtained by The Associated Press.

More than two out of five U.S. higher-education students — more than 9 million people — attend schools that have deals with financial companies, says the report, written by the U.S. Public Interest Research Group Higher Education Fund.

“For decades, student aid was distributed without fees,” said Rich Williams, the report’s lead author. “Now bank middlemen are making out like bandits using campus cards to siphon off millions of student aid dollars.”

That truly sounds terrible: Students being forced to pay fees for a financial service their colleges used to provide for free. So, what exactly are these fees and services? The story continues with examples from a company called Higher One:

Among the fees charged to students who open Higher One accounts: $50 if an account is overdrawn for more than 45 days, $10 per month if the student stops using his account for six months, $29 to $38 for overdrawing an account with a recurring bill payment and 50 cents to use a PIN instead of a signature system at a retail store.

So, overdrawn accounts prompt a fee? And inactive ones? Well, there must be something worse than that. A fee for using a PIN? That seems outrageous … except that the fee can be avoided by signing for the purchase instead.

Ahem.

It took about two minutes of clicking around on Higher One’s website to find all the fees disclosed. In short, the fee schedule reads exactly like that of a traditional “free” checking account. Almost every routine service is provided free of charge — including receiving deposits, such as financial aid payments.

Another bank mentioned in the story, TCF Bank, lists no monthly fees or other charges for routine services on its website. Admittedly, I didn’t check every bank mentioned before getting the feeling this story has been overblown.

To the degree colleges are strong-arming students into signing up for accounts before they’ve had a chance to shop around, and taking money from the banks along the way, that’s unseemly of them. Maybe worse. And if the colleges are breaking the law in the process, they should be held accountable.

But forgive me for being less concerned about the colleges’ behavior than about the apparent fact we are raising a generation of college students who are credulous enough to sign up for a banking service promoted by State U without taking note of the charges, who need someone to tell them that it will be expensive to pay back tens of thousands of dollars worth of loans, and who generally come off in these sob stories as so coddled and helicopter-parented that they can’t be trusted to make basic life decisions for themselves.

If that offends any responsible college students out there, take it up with your financially illiterate classmates. They’re the ones making your generation look bad.

– By Kyle Wingfield

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