Allege deceptive fees in student loans
Ventura,
California – Little did community college student Sherry McFall
know that when she applied for a student loan, she was signing a
contract to pay off huge ATM fees over a 10 to 20-year period.
According
to a Washington, D.C., law firm, Higher One and its parnter Bancorp
Bank make false representations that they are the preferred banking
services firm of hundreds of colleges and universities. They send
their ATM cards to students, even before they have actually
matriculated.
The
ATM cards bear the MasterCard logo and serve as a student ID that is
required for most transactions with the learning institution.
In
order to access their loan funds, they are forced to use the
on-campus machine provided by the bank.
But
in spite of consumer protection laws, students are then also forced
to pay exorbitant ATM usage fees, per-swipe, for inactivity,
overdraft, as well as fees to re-load the cards.
Two
area colleges that use the services of Higher One are McLennan
Community College and Texas State Technical College.
“Because
many of these fees are paid with student loan money, a student could
be paying off these unfair and deceptive Higher One fees for the next
10 or 20 years, which is outrageous,” said Hassan Zavareei, a
partner in the Washington, D.C., law firm of Tycko and Zavareei.
U.S.
Department of Education rules forbid the deceptive practices alleged
in Ms. McFall's class action lawsuit filed in Ventura County Superior
Court.
The
suit alleges that members of the class upon whose behalf the suit has
been filed wind up paying as much as 50 cents to use their PIN when
making a purchase, pay a monthly $19 inactivity penalty, and as much
as $2.50 to use another bank's ATM.
Spread
out over the typical college or university career, the fees add up; then they are rolled into the overall bill students pay against for
as long as a couple of decades – and never know the difference.
According
to the lawsuit, these practices are also forbidden by state and
federal consumer protection laws. Not only do the students have no
choice in the contracts they unwittingly sign between themselves, the
institution of higher learning, and the bank, but they are forced to
use the ATM machines provided at inconvenient locations and at odd
times for which there is often no public access.
Other
alleged deceptive practices include pre-loading of disbursement cards
and outsourcing student ID services violates privacy issues.
“We
are continuing to investigate the practices of Higher One and other banks who offer college students bank accounts and disbursement services. Students
need to be compensated for practices which are, in essence, stealing
their precious financial aid money,” said Mr. Zavareei.
The law firm of Tycko & Zavareei's website furnishes copies of the class action complaint, as well as additional information about the matter.(click here to access the suit)
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