HigherOne, a firm that assists universities with disbursements from student loans using MasterCard debit cards for purposes of books and learning expenses, is coming under more public scrutiny. The universal acceptance of the vehicle, its main value, also makes it subject to criticism, as it can possible be abused by students spending loan proceeds unwisely.
According to the company, roughly half of student borrowers receive aid that covers more than their tuition. Those funds are supposed to cover books, housing and living costs. Schools are required to refund that money to students, and in the past did so in the form of a paper check.
The HigherOne program is said to reduce administrative costs to universities, although its conferences for university staff have been attacked as a waste of funds. On the student side, as with many similar consumer issues, the right solution to perceived shortcomings may be disclosure and education:
The Higher One debit card is optional for students, who can still choose to receive their funds as a paper check or an electronic transfer to a bank account. Higher One acknowledges it relies on colleges to help communicate the benefits of the debit card to students, and Lasater (co-founder of HigherOne) insisted the financial aid officers have their students’ interests at heart regardless of the pampering in Napa Valley.
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