Is Higher One Ripping Off Students?

Student loan debt is soaring as higher education tuition fees continue to rise in the United States. However Higher One, a company which disburses student aid for more than 830 campuses nationwide, reported a net income of $31.89 million for 2011. This number represents a 27% increase in profits from the previous year and thirteen times the profits from 2007.

However, amidst the growing focus on who exactly education aid benefits and whether it is being unfairly appropriated and siphoned by greedy campuses and third parties, a student has filed a class action suit against Higher One. Sherry McFall alleges that the company misleads students and charges them excessive and unfair fees.

"Higher One contacts the student before they ever arrive on campus, says it's partnering with the school and automatically opens the student's account. So that the only way the student can elect to get the money differently is to go into the Higher One website and figure out how to move it," said Hassan Zavareei, the lawyer representing the students in the class action.

The Higher One debit card is marketed as the school's recommended method for receiving financial aid refunds. A Higher One spokesperson doesn't deny that students are required to work with Higher One to get their refund but claims the student is free to receive the refund via whichever method they wish and the Higher One debit is merely an option.

"If Higher One has been hired by the school to handle the disbursements as a whole, then yes, the student has to work with Higher One to tell us how they would like to receive their refund, no matter what method they choose," Lemoine told The Huffington Post. She stressed that the Higher One debit card is optional and activated only if students select that method for receiving a refund.

There are a growing number of third party companies which contract with campuses to handle their financial transactions; a process which often benefits the campus as the outsourcing represents a cut in costs. Higher One is the biggest of these companies. Many people are questioning whether the service is actually beneficial for the student, however, or if the student is being scammed by the parasitic nature of the company.

"The purpose of student aid is to enable the student to go to college not to enrich a service provider," said Mark Kantrowitz, publisher of the financial aid website "The balance of revenues to providers and benefits to the school and student have tilted away from the student and much too much to the service provider."

Among the unfair charges the suit alleges are charged by Higher One is a 50 cent fee for swiping a debit card with a PIN and a $2.50 fee (in addition to normal ATM fees) for using a non Higher One ATM. While this fee can probably be considered industry standard as Higher One claim, there are only 700 Higher One ATM's nationwide whereas other student debit card providers such as Sallie Mae (which also charges the $2.50 fee for out of network ATM usage) allow the student free access to over 35,000 ATMs.

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