By Erin Gabel
A federal court recently ruled Higher One and WEX Bank, Cuesta Collegeâ€™s former financial service providers, violated law by using deceptive practices.
Higher One and WEX Bank were recently ordered to pay $31 million in restitution to an estimated 900,000 students who paid unnecessary fees and $3.98 million in civil penalties, according to the Federal Deposit Insurance Corporation.
Shortly after the ruling, Higher One announced it would sell all assets and liabilities regarding financial aid disbursements. The sale was finalized in June to Customers Bank, Cuestaâ€™s new financial aid provider.
Customerâ€™s Bank has also partnered with WEX Bank to provide FDIC insurance and to issue debit cards to students who have financial aid disbursements this fall.
This means that Cuesta College is still in business with the bank responsible for committing Federal Trade Commission Act violations with Higher One. The agreement, which Cuesta signed prior to the federal ruling, expires in October 2017.
WEX Bankâ€™s previous provider, Higher One, a company started to help students receive their financial aid in a more efficient way, contradicted what is itemized in their mission statement.
â€œHigher One is a company started in 2000 by three college students who believed in a better way to help students receive and manage money,â€ according to Cuesta Collegeâ€™s fact sheet on Higher One.. â€œIn addition to faster ways to receive refunds from Cuesta, we also offer […] features designed to make your life easier.â€
The providers omitted critical information about how students could access their financial aid without Higher Oneâ€™s assistance; provided few no-fee ATMs; and improperly charged students for debit use of their cards â€” all in violation of the Federal Trade Commission Act, according to the FDIC.
â€œUsing my Higher One card, I experienced a lot of fees,â€ said Tenille Parker, a communications student at Cuesta. â€œ When using it [for purchases] I was charged a fee every time.â€
Students under the impression that financial aid disbursement would be made easier, voiced their frustration with Higher One.
â€œI didnâ€™t like Higher One because of multiple issues,â€ said Gary Banas, a returning student at Cuesta College. â€œ[Thereâ€™s] hardly any ATMs, it was hard to get a hold of a live person when calling customer service, and it seemed like I was being charged for every little thing.â€
As Cuesta students return to school this fall, universities and financial providers are required to operate under new rules when providing refunds. Effective Sept. 1, 2016, the Department of Education implemented a requirement for schools to provide students with a neutral list of options that include direct deposit and paper checks.
â€œFirst piece of adviceâ€“make sure your address is current,â€ Patrick Scott, director of financial aid, said. â€œBut also we strongly recommend students use direct deposit to a local bank.â€
BankMobile, a division of Customerâ€™s Bank, advertises that they are the first no-fee bank. A full guide to the services and fees of BankMobile can be found under the â€œall about the moneyâ€ tab on Cuesta Collegeâ€™s website.
Unlike before, there are no fees for monthly servicing if you are a student. Additionally, there are no fees for debit transactions or overdrafts because transactions are not authorized with insufficient funds. There is also access to 81 ATMs in cities ranging from Morro Bay to Santa Maria.