Since passage of the Credit Card Accountability, Responsibility and Disclosure Act of 2009, use of credit cards among college students has declined. Debit cards, however, are becoming more common and now are used by nearly 80 percent of students, a survey by Sallie Mae and Ipsos found. Many student ID cards double as debit cards, and prepaid cards are gaining popularity among parents who want to better control their kids' spending. The problem with prepaid and debit cards is that they do not allow students to build a credit record, and they often come with fewer marketing restrictions.
Western Washington University partnered with the firm Higher One to offer financial aid with debit cards. More than 80 percent of Western Washington students signed up for a Higher One account, many of them believing it was required. Student William Campbell, who recently spoke before a Consumer Financial Protection Bureau panel, said the accounts are a bad idea due to high fees and poor customer service. Higher One reached a settlement in 2012 with the FDIC over what the agency called "alleged unfair and deceptive practices in violation of Section 5 of the Federal Trade Commission Act." Since then, Higher One reportedly eliminated 10 different fees on its accounts and paid restitution to some customers. Meanwhile, Ohio State University last year signed an agreement with Huntington Bank, in which the bank agreed to pay the school $25 million upfront and commit another $100 million in loans and investments for campus projects in exchange for becoming the university's "official consumer bank." Members of Congress are concerned that the banks involved in such partnerships are not offering the best terms.