6,300 Students Pay High Fees to Access Student Loan Refunds

A controversial student loan program, in which students from the City Colleges of Chicago receive their federal student loan refunds on a pre-loaded debit card rather than through a traditional check, has already enrolled some 6,300 students despite students being charged high fees for using the card’s basic banking services, reports the Chi Town Daily News (“Controversial Chase Student Loan Program Enrolls 6,300,” Feb. 3, 2009).

The university system began offering the debit card system as an alternative to paper checks after the school system noticed a trend of students’ paper checks being stolen or fraudulently used. Students complained that they were forced to sign up for the debit cards and that the fees associated with the cards were slowly chipping away at their student loan refunds, which students generally rely on to pay for non-education related expenses like rent, groceries, and gas.

Students using the debit cards, offered by J.P. Morgan Chase, must pay for services — $1.25 to check their account balances, $2.00 to use the card for every transaction, and $10.00 to speak with a bank teller — that are typically offered free of charge to other Chase customers.

“With the high fees, having to do the withdrawals and having it cost so much, getting the card is not even worth it,” says Christopher Collier, a student senator at Wright College, one of the university system’s seven campuses.

To avoid paying any Chase banking fees, 1,700 students have opted to have their student loan refunds direct-deposited into their own bank accounts rather than choosing to sign up for the debit cards, but Collier says he still thinks that college administrators should make more of an effort to educate their students about all of their student loan refund options.