College students facing new debt threats
Recent provisions of the CARD Act prohibit students under 21 from obtaining a credit card without a co-signer, leading many to turn to debit-cards as a convenient alternative. Though making the switch from credit to debit may not mean less debt for the latest college crop.
Higher One, a Connecticut-based company, has signed 675 colleges across the country to its new program, which allows students to use debit cards to access loans that can be spent virtually anywhere.
Previously college loan checks had been cited by school administrators as a time-waster, taking weeks to reach college students in the mail. Some worry this easy access will lead to increased spending, according to a report by the Washington Post.
The company has recently been accused of the same practice that led students into credit card debt over the last decade, including $19 inactivity fees, 50-cent charges for PIN purchases, and a $2.50 fee for using other banks’ ATMs, the Post reports.
These purchases may not seem like much, consumers may want to examine credit card alternatives carefully, as the average college graduate carries $19,000 in student loan debt.