THOUGH CITY COLLEGE STUDENTS have continued to grumble about fees and convenience issues caused by the school’s partnership with banking institution Higher One, college and district administrators see the third-party vendor as an improvement to the school’s system of administering financial aid to students.
More than 1,600 colleges across the nation have signed up with Higher One to provide financial aid services since the banking institution was founded in 2000.
Since Higher One went public in 2010, its reputation has been marred by student uproar, class action litigation and federal regulatory penalties over fees charged to students.
In 2010, the Los Rios Community College District entered into a three-year contract with Higher One to administer and coordinate the district’s $97 million financial aid program to the four campuses.
According to Dr. Victoria Rosario, the Los Rios associate vice chancellor for student services, 32 percent of City College students receive some form of financial aid other than Board of Governors tuition waivers.
Of those students receiving aid, 69 percent elected to receive their disbursements through a Higher One account, while the rest opted for paper checks or direct deposit. More than 14,000 Los Rios students were issued Higher One debit cards to manage their financial aid funds.
According to Rosario, “under the contract with Higher One, the Los Rios Community College District is paying Higher One $21,000 for the 2013-14 academic year, for third party financial aid disbursement services. Of this amount, $6,319 is from Sacramento City College.”
Before contracting with Higher One, a district-wide survey of Los Rios students revealed that 24 percent of respondents relied on check cashing services, which charge high interest rates and fees, to cash their financial aid checks.
According to Rosario, the partnership benefits students because Higher One gets financial aid funds to students faster at lower cost than a check cashing store.
But not every student is pleased with the new system.
“There was a lot of confusion [after the switch to Higher One],” recalled City College sophomore Adrian Shepherd.
The confusion led many students like Shepherd to incur fees for monthly service, debit transactions, ATM withdrawals from non-Higher One machines and other typical account actions.
“When you use the card, if you don’t use it as credit, you’re going to get all kinds of fees, all the time, on anything you buy… and some places don’t accept the credit option, so then you get more fees there,” said City College student Anissa Pulido.
City College students Sharon Johnson and Kevin Drew both approached the Higher One ATM in Rodda Hall North Sept. 29 only to discover that the machine refused their debit cards. Johnson noted that was not the first time she could not access her financial aid funds due to an ATM malfunction.
“The financial aid system is my primary source of income,” Drew said. “There’s nothing really you can do when that ATM breaks down, other than go to another ATM and be charged anywhere from $2 to $5 in fees.”
Despite Johnson and Drew’s frustrations, according to Rosario the 10 ATMs spread across the four Los Rios campuses “maintain an average ‘uptime’ that exceeds 98 percent, which is consistent with general industry standards.”
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The Higher One website outlines its fee schedule for students hoping to avoid unnecessary charges.
According to Rosario, the district has received fewer than five written complaints per year about Higher One fees and no written complaints about disbursement issues since the contract began in 2010.
Though City College and Los Rios administrators assure that the partnership has benefited students, Higher One has encountered serious legal troubles recently.
According to a class action lawsuit filed against Higher One by Ventura College student Sherry McFall, “targeting financially unsophisticated students with excessive bank fees — and using scarce financial aid money to pay those fees — is unethical and immoral and makes it more difficult for students to meet legitimate education expenses.”
Speaking for Higher One, Perry emphasized that the class action suit has “no merit.” Perry also noted that “in the last six months to a year [Higher One] dropped many fees.”
In 2012 the Federal Deposit Insurance Corp., the federal banking regulatory agency, charged Higher One and Bancorp, its former banking partner, with “unfair and deceptive practices” in violation of Section 5 of the Federal Trade Commission Act in connection with its student financial aid account practices.
The FDIC negotiated an $11 million settlement with Higher One, which included restitution for approximately 60,000 students. The Los Rios Community College District was not a party to this suit.
Additionally, the terms of the agreement require Higher One “not to make misleading or deceptive representations or omissions in its marketing materials … and to institute a sound compliance management system.” It also places “restrictions on the charging of certain fees.”
A subsequent filing with the Securities and Exchange Commission in 2012 reported that Higher One “substantially revised [the] compliance management system.”
But the district has no plans to change the current funding mechanism for financial aid.
Los Rios administrators have extended the district’s contract with Higher One in 2012 through summer 2017.
“At the time that the Los Rios District revised and extended its contract with Higher One, the District was not aware that Higher One was under regulatory investigation by the FDIC,” Rosario said.
According to City College Dean of Financial Aid Christine Hernandez, “Sacramento City College currently offers advice to its students on financial literacy, which is the ability to use knowledge and skills to manage financial resources effectively.This information can be found on the Financial Aid TV link on the college’s Financial Aid website (http://scc.financialaidtv. com). The college is also researching additional financial literacy options.”
For more information about Higher One fees and how to avoid unnecessary charges, visit: https://lrccdonecard.higheroneaccount.com/studentaccount/feeschedules.do
