Credit Card Companies and Big Banks Winners Under Education Department Proposal

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OBERLIN, OH (April 27, 2024) – Credit card companies and big banks would receive a windfall at the expense of college students under a U.S. Department of Education proposal that would require books and supplies to be paid for separately rather than included in tuition and fees, the National Association of College Stores said today.

“The number of student credit and debit card transactions would increase significantly under this proposal,” NACS Vice President of Government Relations Richard Hershman said. “That combined with the higher prices and adding sales taxes equals more profits for Visa and MasterCard and the big banks on the backs of students. The proposal has positioned banks and credit card companies as winners with increased fees driving up costs for students and a huge share of financial aid lining the pockets of big banks rather than going to education.”

Visa and Mastercard charge merchants, including non-profits, a “swipe” fee to process the transaction every time a debit or credit card is used to make a purchase. According to the Merchant Payments Coalition, swipe fees drove up the cost of school and college shopping by more than $3 billion this current school year. Swipe fees, which hit a record $172 billion nationwide last year and are too much for merchants to absorb, represent college stores’ highest operating cost after labor.

Hundreds of colleges and universities across the country incorporate the cost of certain books and supplies in tuition and fees, allowing institutions to achieve significantly lower costs for students through bulk purchasing. Doing so ensures all students have equal access to required materials at the start of the term, while allowing students to opt out of the programs through the course change add drop period, typically about two weeks into the term. Similar to K-12 schools, many institutions have been operating this way since the 1800s. The Education Department is proposing to end these programs and the benefits they provide students, with the only exception being for incarcerated students.

Affordable access programs have been proven successful in mitigating the expenses associated with course materials, supplies, and equipment, while also reducing sales taxes and credit/debit card swipe fees charged on limited financial aid dollars. That has significantly reduced the number of transactions and swipe fee costs passed on to students. For example, one public university saw close to a 40% reduction in credit card swipe fees because of its affordable access program.

Learn more about the cost savings programs at:

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