UND Says They'll Continue Partnership With "Unconscionable" Debit Card Company

Yesterday I wrote here on SAB about University of North Dakota students receiving notices that they may be eligible for a payout in a class action lawsuit over the way a company called HigherOne has been handling student debit cards. That company entered into a partnership with UND in 2009, despite protests from some students, to issue debit cards to students loaded with their excess financial aid.

The lawsuit, which HigherOne has agreed to pay $15 million to settle, alleges that the company engaged in deceptive practices and charged students excessive fees. I looked into the relationship a little deeper, and wrote about it today at Watchdog.org.

A few highlights.

First, while HigherOne has so far denied the allegations in the lawsuit (even as they settle it), it turns out one of their partners in the debit card deals has been sanctioned in Illinois for “unconscionable” dealings with students:

In a November 2013 statement to Inside Higher Ed, a HigherOne spokesperson denied the plaintiff’s accusations in the lawsuit, but wouldn’t rule out an admission of wrongdoing once the settlement is approved.

Yet a partner in HigherOne’s student debit card service has been sanctioned for the practices alleged in the lawsuit. The Illinois Department of Financial and Professional Regulation has fined Cole Taylor Bank of Chicago $3.5 million for engaging in deceptive practices.

“It is unconscionable for any company to seek profit by misleading customers about the terms of their financial accounts,” Manuel Flores, acting secretary of the IDFPR, said in a news release announcing the ruling on July 1.  “Too many students and their families end up with a massive burden of education debt, so it is especially important to protect students from deceptive practices.  I’m gratified by our efforts to protect these students’ finances by holding a bank accountable for its unlawful business conduct.”

Former UND student Shane Gerbert, who was a leader in pushing back against the UND/HigherOne partnership when he was a student, is saying “we told you so.”

When UND chose to partner with HigherOne, officials were certain the arrangement would serve students well.

“There’s pressure from a group of very vocal students that we should throw this out,” Associate Vice President of Finance and Operations Peggy Lucke told Ryan Johnson, a reporter for the Dakota Student, in 2008 while the partnership was being debated on campus . “If we could work together and try to make it work and make it work better, I think that is the way we serve students.”

But students were skeptical.

“That’s really just not the best thing to be doing with our financial aid,”Shane Gerbert, who helped lead the campaign against HigherOne at the University of North Dakota, told the Washington Post in 2010. “They’re siphoning it away little by little.”

Asked to comment on the latest developments with HigherOne’s offerings, Gerbert said he wasn’t surprised.

“Our vocal group knew this back in 2008, when it came out,” Gerbert, who has since graduated from UND, told Watchdog.org. “Giving our information and bank accounts over to a third party was a bad idea then, and now. With this newest development, the simple response is ‘we told you so’.”

But despite all this, UND spokesman Peter Johnson is saying UND will continue their relationship with HigherOne and that students are on their own when it comes to how their money is handled:

“It is important to understand that students can choose any bank to handle their money — they are not required to use a HigherOne account for their banking needs,” Johnson told Watchdog.org in an email. “In fact, we suggest to students that they use any bank accounts that they already have in place.  Those students who choose to establish a HigherOne bank account do so of their own free will.”

Asked what steps UND has taken to ensure that HigherOne is treating students fairly, Johnson said the university has “asked Higher One to make sure our students are treated fairly.”

“Again, UND students are not required to use Higher One for their banking needs; they can use any bank,” Johnson said. ” The University of North Dakota has no control over what banks charge.”

Johnson said UND has no plans to discontinue their partnership with HigherOne, and stated that the university receives no revenue from the arrangement.

That seems like a cavalier attitude when it comes to students apparently getting ripped off by a company partnered with UND. While Johnson says UND has “no control over what banks charge,” the institution certainly has control over what companies they choose to endorse for their students, don’t they?