The Student Government Association passed the “Higher One No Confidence” bill in IRA last Senate meeting on Nov. 28.
Higher One banks provide refund cards and services for students who receive financial aid. The account features several fees, which include being charged $.50 every time someone uses the card as debit and inactivity fees.
“This change has been something we have discussed in the past; about some of their business practices,” said Student Body President Cedric Bandoh.
“This is financial aid money that should be going towards the need and use of the student.”
Shoba Lemoine, the communications director for Higher One, said fees of this nature are present in any bank, and Higher One’s upfront disclosure of fees is what makes it different from leading national competitors.
“At Higher One, we’ve always been very transparent ever since 2000, and we take a really straightforward educational approach to banking because we work with students, so disclose absolutely all of our fees upfront,” Lemoine said.
“We go a step further than others because we provide an explanation of every single potential charge; just to see it on the list does not mean that you’re going to incur it. It’s just there because it’s a potential charge.”
Part of reason SGA wants UH to remove itself from Higher One is that the Federal Deposit Insurance ordered Bankcorp — a former partner of Higher One — and Higher One, to provide $11 million in restitution to approximately 60,000 students across the nation for “unfair and deceptive practices,” according to the bill.
“The FDIC found that Higher One and The Bancorp Bank were: charging student account holders multiple insufficient fund (NSF) fees from a single merchant transaction; allowing these accounts to stay in overdrawn status over long periods of time, thus allowing NSF fees to continue accruing,” the FDIC said in an August press release.
However, Lemoine said that NSF fees are common among banking institutions and that the number of students receiving refunds is less than 2 percent of Higher One’s clientele.
“(NSF) fees are almost charged by every banking institution. That is when there is delinquent bank behavior, so if you are spending in excess of what is in the account, that costs the financial institution money so you’re running in the negative,” Lemoine said.
“And to give you an idea, $11 million may sound a lot but we have millions of account holders, and this affected only a small fraction of them – less than two percent were actually affected.”
Students who receive financial aid are given the option of not using a Higher One account by choosing to have their aid refunded to a personal account.
“We’re giving student a choice when it comes to how they’re receiving money. They don’t have to choose to bank with Higher One, that’s just one option,” said Lauren Perry, UH campus relations specialist for Higher One.
Before students step on campus, they are automatically mailed a higher one card whether students use it or not, Bandoh said. The University has a transaction cost of $7 to $8 for every refund that is being issued.
“Students indirectly pay for those cards. Even if you don’t use Higher One, some of your money is used for that plastic card,” said Bandoh
Students such as political science junior Kristy Brooks also feel frustration toward the banking institution.
“The fact that financial aid money that is being taken away from us with all these is not right, because those fees add up to money that I might eventually need,” Brooks said.
SGA bid for no confidence in Higher One and will forgo practices with Higher One. Several schools across the country do not use Higher One as a refund provider, Bandoh said. Other schools use a different bank or provide refunds directly to student’s account, which is the case at The University of Texas at San Antonio.
The best scenario for the student at the University would be to eliminate the middleman and have the university automatically deposit the refund into a student’s personal account, Bandoh said.
However, students shouldn’t expect the University to make the change anytime soon, he said.
“This was a pretty bold statement to take and I want to thank all the senators who were involved with this because this is something I was passionate about when I came in,” Bandoh said.
Additional reporting by Julie Heffler.
