| WASHINGTON, Sept 27
WASHINGTON, Sept 27 Democratic U.S. lawmakers
are demanding to know whether U.S. banks paid money or gave
gifts to college officials to set up student debit card programs
that the legislators say are "fee laden" and inflate education
Through these programs, the banks provide students with
deposit accounts or debit cards to access their scholarship
funds and student loans.
At least one bank working with legislators has said it does
not think the debit card programs are beneficial to students and
believes they should be cut back.
In a letter dated Sept. 26 the lawmakers said they fear such
financial deals could open up students to exploitation through
"fee-laden" debit cards that could raise the cost of their
education and push students deeper into debt.
They also said they were concerned these arrangements could
lead to abuse of the federal student loan system with funds
being diverted to benefit the banks and the colleges.
The letter was sent to Wells Fargo, US Bancorp
, PNC Financial Services Group, SunTrust Banks
, TCF Bank, Citigroup, Huntington
Bancshares, Commerce Bancshares, and Higher
The lawmakers include Representative George Miller, the
senior Democrat on the House Education and the Workforce
Committee; Senator Dick Durbin, the assistant Senate majority
leader; and Senator Elizabeth Warren, a member of the Senate
They demanded that the banks provide lists of institutions
with which they have such agreements, information on how many
accounts the banks have opened, the fees collected over the last
three academic years, and what the colleges were paid in return.
"At a time when college costs are increasing and college
students are drowning in debt, the federal government must
ensure the integrity of student financial aid programs and step
in if financial aid dollars are being diverted through deceptive
or predatory practices," the letter said.
A spokesman for Wells Fargo said the bank looked forward to
providing the requested information.
Higher One said that it has been working directly with
several congressional offices and has already shared much of the
"We don't believe this model prioritizes the student's best
interests and we are completely committed to this practice
diminishing," Higher One's spokeswoman Shoba Lemoine said.
The other banks either declined to comment or did not
immediately respond to Reuters requests for comment.
In a May 2012 report, the U.S. Public Interest Research
Groups, a collection of non-profit advocacy groups, expressed
concerns about the aggressive marketing involved in these
agreements and weaker protections for the students.
The group found nearly 900 card partnerships between
colleges and financial institutions at the time and that
students were subject to extra fees including per-swipe fees,
inactivity and overdraft fees.
The Consumer Bankers Association said in a statement that
those kinds of relationships can provide value to both the
colleges and the students and often provide "low-cost,
high-convenience financial products" tailored to the students'
needs, and that banks are obligated to be transparent in such