High fees for debit cards upset Kennedy-King students

  • By Peter Sachs
  • Education reporter
  • November 03, 2008 @ 9:55 AM

Kennedy-King College is under fire for inking a deal with Chase Bank that loads student loan funds onto debit cards, and then socks students with unusually high fees to make withdrawals or check their balances.

The fees include $1.25 to check the card's balance at an ATM; $2 to withdraw money from Chase's own ATMS;  $15 to replace a lost card; $12 to cancel the card and receive a check with the remaining balance; and $5 for cards left unused for six months.

Students felt forced into getting the debit cards, says Kennedy-King student government president Gerald Johnson. He adds that the high fees attached to the cards weren’t made clear to everyone.

“Why didn’t anybody argue on our behalf in regards to ridiculous fees?” he asks.

Christine Holevas, a Chicago-based spokeswoman for Chase, says she could not find anybody at the company who could explain the fees.

“I just don’t know anything about the program,” Hovelas said.

City Colleges officials were unavailable to talk about the debit card program, according to district spokeswoman Elsa Tullos.

The district provided the Daily News with a written statement about the program, and turned over hundreds of pages of documents in response to a Freedom of Information Act request.

In several places, Chase lists the ATM card fees students would have to pay, indicating that district officials knew about them in advance.

The statement says Chase reduced some fees after a request from the District. That reduction is not reflected in any of the documents obtained by the Daily News. Tullos could not provide more details on which fees were reduced, or by how much.

Johnson and student presidents at the other city colleges are pushing the district to do what it can to lower the fees and give students other options to get their loan money as the district expands the cards from Kennedy-King to other campuses in the coming months.

Loan refund money is often used by students to pay for things like rent and groceries.

According to district documents, the Chase program began this fall, when students were given a choice: Sign up for the debit card, onto which all of their loan refund dollars would be loaded, or wait for a paper check to come in the mail.

But Johnson says that choice was never made clear to students. And many students  who signed up were not aware of the fees involved. Some of the debit card forms students filled out on registration day had the fees listed on them, but many did not, he says.

Many of the fees are higher than what Chase charges for its other debit cards, even those geared toward college students, according to information on the company’s Web site.

With any other card, withdrawals from Chase ATMs and inside bank branches are always free. A replacement card costs $5.

Despite the fees, a two-page marketing sheet for the debit cards makes them sound like the smart choice for students to make. Get cash at “ATMs Worldwide,” it advertises.

Pictures show a beaming student using an ATM and another happily handing over her debit card to a cashier.

Once Kennedy-King’s student government realized students would get hit with fees, it encouraged students to go to a bank teller and withdraw all their money at once. As long as that was their first withdrawal, there would be no fee. Then students could take that cash and put it into their personal checking accounts.

“That’s probably why we haven’t gotten a report of students coming with a lot of complaints about being charged, because we were proactive about educating them about how to avoid them,” Johnson says.

Concerns about the cards extend beyond Kennedy-King, because the district  is planning to start similar programs at its other campuses.

Because of that, student leaders from all of the city colleges who met with district officials Friday to discuss the debit cards.

“What we want for our students, first of all, (is) an apology,” says Kimberly Johnson, a Kennedy-King student government officer who attended the meeting.  "This program that was piloted at our school was not a success and I do not want any other students to experience that.”

In her written statement, Tullos says the district will continue to talk up the Chase card.

“We will continue to communicate the benefits of using the Visa prepaid debit card or having funds electronically transferred to student bank accounts,” the statement says. “Additionally, the traditional paper check will be available as a last option.”

Peter Sachs is a Chicago-based journalist. He covers higher education for the Daily News.