Picture this: after a night of hanging out with your friends atyour favorite hotspot, the waiter comes and gives you the bill.”I’ll get this,” you tell your friends with a wave of your hand, asyou hand the waiter… your student I.D.?
This seemingly strange situation could become a reality forstudents at PSU and two other Oregon universities this winter. Lastweek, the schools unveiled plans, under a flurry of concerns andcomplaints from student leaders, to issue new student I.D. cardsthat, among other new features, will have the capability tofunction as a MasterCard debit card.
PSU plans to begin the process of issuing the cards November 5,with most students receiving them by the beginning of winterterm.
How the card works
The new cards, called “OneCards,” will be issued by Higher One, aNew Haven, Conn. company that specializes in issuing theseI.D./debit cards to universities, primarily on the east cost. Thecompany of 45 employees manages programs similar to the one at PSUat 16 other universities nationwide, and handles about in studentassets.
At the most basic level, the new I.D. cards will function muchlike current PSU student I.D.s. Higher One is even speciallydesigning a new card that includes the radio chips used for manydoor locks around PSU campus.
In addition to I.D. functions such as door entry, libraryborrowing, and meal plan use, students will have the option to opena checking account with Higher One, called a “OneAccount.” Studentscan opt to have their financial aid disbursements depositeddirectly into the account, as well as make their own deposits orhave their parents transfer money to them.
Students can then use their I.D. just as they would a debit cardissued by any other bank, accessing banking services from one ofthree ATMs on campus, or through a Higher One website speciallycustomized for PSU.
Why the OneCard?
PSU’s offices of Business Affairs and Financial Aid have faced hardtimes in recent years. Budget and staff cuts have meant what wasonce the work of many now must be done by the mere few. Last yearfinancial aid requests became backlogged by the thousands,prompting long lines of students at financial aid windows with onlytwo cashiers to assist them.
Higher One will now manage all of PSU’s financial aiddisbursement, whether students choose the OneAccount, electronicdeposit, or a simple paper check. Dee Wendler, director of businessaffairs for PSU, says she hopes that this will streamline thedisbursement process, enabling students to get their money fasterand allowing the few remaining employees more freedom to work withstudent issues.
“I want to have my resources available to talk with and workwith students,” Wendler said.
While both the University and Higher One are touting theincrease in financial aid disbursement options to students, thereis another, more hidden benefit of the OneCard program. Thecash-strapped university gets to upgrade to a more secure, moreversatile identification system virtually free of charge. HigherOne absorbs the cost of marketing, distributing and supporting theI.D. system.
Higher One profits only if students use the checking accountfeature. Just like any other MasterCard issuer, they collect asmall fee from retailers each time their cards are used to purchasegoods. They also charge for additional banking services.
Because the company’s profits are derived from use of theiraccounts and not from the I.D. services they provide, the companycan provide the I.D. card service for free, with the hope that manystudents will opt to use the company’s financial services insteadof another bank.
“Obviously, we’re here to make money and we want to make money,”Sean Glass, one of the founders of Higher One conceded. “Would webe disappointed if we launched and only 10% of students signed up[for the checking account]? Yes. But we would then focus onoffering a better product.”
Glass has good reason to be confident that the checking accountfeature will catch on. PSU is Higher One’s fifteenth client sinceGlass and two other friends from Yale University launched thecompany two years ago (two more schools have since signed on), andtypically 20 to 30 percent of students have opened checkingaccounts at the program’s launch at their school.
The company has handled $40 million in financial aiddisbursements in the last two weeks alone, and $32 million of thathas wound up in OneAccounts.
On average, 65 percent of students eventually opt to receivetheir aid disbursements through the OneAccount, according to CaseyMcGuane, Higher One’s vice president of university operations.
Announcement of the new I.D. program was met with resistance frommany student leaders, who expressed both anger that students werenot included in the decision to implement the new system andconcern that the new cards may encourage students to spendirresponsibly.
Tensions culminated at conference call meeting last Thursdaybetween Higher One representatives McGuane and Nora Lee and amarketing team of PSU officials, which was also attended by membersof Associated Students of Portland State University (ASPSU).
“In my interpretation of what I’ve seen, this is not beingwarmly received,” said Tony Rasmussen, communications director forASPSU who said that he has spoken to over 40 student leaders aboutthe cards in the past week.
“We weren’t involved in the decision making process, and forthat reason we don’t support the program,” he said.
According to Wendler, students were invited to participate inthe bidding process, but few expressed interest. She also said thatshe discussed the proposal with students waiting in financial aidlines as early as last fall.
Student government representatives, however, say that they werecaught completely off guard by the deal, and were not informeduntil after the contract had been signed. Ryan Klute, ASPSU vicepresident, was the only student present at the program launchmeeting.
“There was absolutely zero effort to ensure that students wereinvolved in this process,” ASPSU president Christy Harper said.
Students also expressed concern that the new card might temptstudents to make poor spending decisions with their money, pointingout in particular that financial aid is one of the main sources offunds in OneAccounts.
While the OneCard is not a credit card, PSU has not beenparticularly welcoming to things with Visa or MasterCard logos onthem in the past. A few years ago, ASPSU successfully campaigned toprevent credit card companies from marketing to students on campus,mostly due to the alarming rate at which students would fall victimto credit card debt.
Higher One does provide what it calls a “financial wellnessprogram,” a set of education sessions, open forums, and webresources, which the company says helps students learn to managetheir finances responsibly. The company’s PSU-specific website willalso provide resources for students who utilize the OneCard optionto budget their finances.
Student leaders at Thursday’s meeting, however, were skepticalof the program, mostly because samples of the company’s literaturefor students appeared to be intended to steer students towardsutilizing the card’s checking account and debit card features.Higher One also has programs at other universities that rewardstudents with points for shopping at participating retailers,raising the accusation that the company is oriented more towardsencouraging students to spend their money rather than save it.
McGuane responded to student concerns by pointing out thatstudents have a choice to utilize the card’s banking and debit cardfeatures.
“The choice is the student’s,” McGuane said, “They can choose toactivate the card for debit use or just as a regular I.D.card.”
“Providing one option that is highlighted and bolded over theother two doesn’t seem like equal options,” Klute responded,referring to Higher One literature that appeared to encouragestudents to use the OneAccount for their aid disbursement ratherthan electronic deposit or a paper check.
Wendler emphasized that PSU took great care in choosing the newI.D. program, interviewing several possible providers, and HigherOne was the only one that provided the types of services that wereneeded. The university even decided to wait until winter term tolaunch the program rather than fall, despite some disgruntlementfrom Higher One.
“We didn’t go into this lightly,” Wendler said. “We didn’t wantto rush into this program in the fall.”
Like McGuane, Wendler emphasized that students do not have toactivate the debit card feature.
“Activate it as an I.D. card and you never have to activate itany other way.”
PSU is not the only school where the OneCard has been met with alukewarm reception. “It’s not uncommon at all,” McGuane said, butthen related several examples of what he said were students whowere at first skeptical about the program but later becameappreciative of its benefits.
Glass said that from his own experience as a college student, heunderstands student skepticism about a new company arriving oncampus, especially one flashing something like MasterCard logos,but he hopes students will give them a chance to prove the benefitsof their product.
“You have to get to know us before you group us with evilcorporations,” he said. “In the end, you don’t have use your[debit] card. It’s your choice.”