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Senator Durbin joins consumer group to educate students about common tricks and traps of campus financial products
As classes begin for thousands of students across Illinois this week, Illinois PIRG Education Fund released tips for college students to avoid the tricks and traps of campus financial products that can make the cost of college even higher.
“College is the first time many people make significant financial decisions,” said Jayme Massion, a senior at the University of Illinois, Chicago, and student leader with Illinois PIRG Education Fund, “so we’re helping students make smart decisions when considering private student loans, debit cards, and credit cards.”
“College students across Illinois are beginning another school year, many having taken on thousands of dollars of student loan debt to reach this point in their education,” said U.S. Senator Richard Durbin. “The last thing these students need is to fall even deeper into debt as a result of predatory private student loans or excessive fees on the financial products that they use on campus. I am proud to partner with Illinois PIRG in helping get students the information they need to make smart financial choices about their education as they head back to campus for the new school year.”
How to pay for college is typically the largest financial decision students and families make. Illinois PIRG Education Fund encourages students to maximize their federal loans before considering private loans, which have variable rather than fixed rates, and have less generous repayment terms.
"With student loan debt officially surpassing auto and credit card debt in the United States, it is incredibly important to take the time to understand all of the factors that may increase the cost of a college education,” said Flavio Bravo, President of Unified Student Government Association at Loyola University. “Even with scholarships and grants, there are still countless fees that make up the cost of attendance for a college student."
An increasing number of colleges are partnering with financial institutions to disperse financial aid using debit cards rather than paper checks or direct deposit. While saving administrative costs for the college, students can see their financial aid eaten away by charges in fees. This practice has come under increasing scrutiny in recent years, with some firms paying heavy fines for deceptive practices. In July, the Federal Reserve Board and Illinois Department of Financial and Professional Regulation levied a $4.11 million penalty against Cole Taylor Bank for its role in deceptive marketing practices with former partner Higher One.
"When I applied to get my first debit card as a freshman at the University of Illinois at Urbana-Champaign, I learned the hard way about the many fees and the magnitude of the fees I could accrue,” said Mitch Dickey, Student Body President at the University of Illinois, Urbana-Champaign. “The information that is provided in this fact sheet is extremely helpful and I encourage my fellow students to use it."
Students have the freedom to choose their own financial products and do not need to use debit cards or other financial services presented to them by university partnerships.
The tips sheet can be found online here.
Read US PIRG’s 2012 report, The Campus Debit Card Trap.
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