By Erin Gabel
A federal court recently ruled Higher One and WEX Bank, Cuesta College’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, Cuesta’s new financial aid provider.
Customer’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 Bank’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.
“Higher One is a company started in 2000 by three college students who believed in a better way to help students receive and manage money,” according to Cuesta College’s fact sheet on Higher One.. “In addition to faster ways to receive refunds from Cuesta, we also offer […] features designed to make your life easier.”
The providers omitted critical information about how students could access their financial aid without Higher One’s assistance; provided few no-fee ATMs; and improperly charged students for debit use of their cards — all in violation of the Federal Trade Commission Act, according to the FDIC.
“Using my Higher One card, I experienced a lot of fees,” said Tenille Parker, a communications student at Cuesta. “ When using it [for purchases] I was charged a fee every time.”
Students under the impression that financial aid disbursement would be made easier, voiced their frustration with Higher One.
“I didn’t like Higher One because of multiple issues,” said Gary Banas, a returning student at Cuesta College. “[There’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.”
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.
“First piece of advice–make sure your address is current,” Patrick Scott, director of financial aid, said. “But also we strongly recommend students use direct deposit to a local bank.”
BankMobile, a division of Customer’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 “all about the money” tab on Cuesta College’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.
First, let me apologize for any confusion that you or any Cuesta College student may have experienced with selecting a refund preference. I agree that getting your refund quickly is very important! Thank you for your concern and allow me to provide more information on how the refund process works.
The first thing we do when new students enroll is to send out the Personal Code by mail to the address provided to us, which we follow with an email that also contains a Personal Code. Every student is different (some don’t check mail, some don’t check email) so we take a multi-channel approach to make sure we reach as many students as possible as quickly as possible. For students that miss our email and letter, administrators at your school also have the ability to email you an Instant Personal Code upon request.
We’re always looking to improve and find new ways to get the information students need in quicker and more convenient ways. Most of the great ideas we’ve implemented over the years have come from our schools and their students. We appreciate your feedback and we’ll continue to work on additional ways to speed up the selection process.
For students who have made a selection, we disburse all refunds within a business day of receiving those funds from your school. If a student has not made a selection and has a refund waiting, those funds are disbursed within a business day of when that student actively selects a preference. We have no interest in holding your refund, and it’s in everyone’s best interest to disburse funds quickly. For students who never select a preference, we ultimately have to send a check. Checks are expensive to produce and mail and non-electronic disbursement of your funds slows their availability to you. We have been successful as a service because we’re quick and inexpensive. We hate spending money unnecessarily and not getting you your money as fast as possible as much as you do!
Finally, I’d like to discuss your refund options. We provide three options for Cuesta College students: 1) direct deposit to an existing account, 2) access to the optional BankMobile Vibe account (that carries no monthly fee for students and almost no other fees – for example: free checks, free teller withdrawals and access to an ATM network with 55,000 machines), or 3) paper check.
There is no charge to select any of these three methods and no incentive for your school to promote one method over the other. Our goal is to empower you with the knowledge and choice to make the selection that best fits your needs. And, students can change their preference at any time, as many times as they’d like for free.
I hope this information has been helpful. I ask you to compare our lack of fees and free ATM access to other banks in your market. It is our goal to not only offer you a better value proposition, but to also keep you as a customer for life.
If you have further questions, we are happy to answer them. For your convenience, BankMobile Disbursement has an FAQ page: https://higherone.custhelp.com/app/home. We can also be reached on Twitter at @AskBMD or through our website at http://www.bankmobilevibe.com.
Thank you for this opportunity to explain the refund selection process. Your feedback is always welcomed and appreciated.
Warren Taylor, President
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