Higher One, provider of financial solutions to education institutions, has made a deal with Portland State University and Southern Oregon University to do away with some of its fees, according to a columnist at The Oregonian.

When the universities’ Higher One contracts came up for renewal, administrators negotiated that the 50-cent swipe fee be dropped from the card. The PSU One Card, Portland State’s official student ID, is branded with a MasterCard logo, which means students can tap funds at an ATM or wherever MasterCard is accepted.

However, students complain about the unusual fees that come as a result of doing so.

Higher One and the universities have started a campaign to encourage students to use the credit function of the card instead of the debit function, according to the columnist. Students who swipe the card as a “debit” and enter their personal identification number would get charged a 50-cent fee each time.

By choosing credit Higher One receives a higher interchange fee from the merchant even though they will be losing out on the 50-cent fee from students. The 50-cent swipe fee could be reinstated if the universities campaign to get students to use the credit functionality isn’t successful.

Higher One has been criticized in the past because of its fees. The company charges an abandoned account fee of up to $19 a month, if a student doesn’t use an account after nine months. They also pay $2.50 when they don’t use a Higher One ATM, which are located only on college campuses.

Update: Following the original posting of this piece, CR80News spoke with Scott Gallagher, director of communications for Portland State University.

He said that the fee drawing the most student attention is the 50-cent charge for PIN-debit transactions. This was a topic when Higher One renegotiated its contracts with Portland State and Southern Oregon universities, he adds, stressing that student input was a key driver to get Higher One to drop the fee.

In exchange for dropping the PIN-based debit fee, Gallagher says the universities agreed to encourage students to choose signature-based transactions when using the Higher One card. The schools have put information on their Web site encouraging students to “swipe and sign” instead of entering the PIN. Higher One receives a higher interchange fee from merchants when signature-based transactions are conducted. This, it appears, is intended help to offset the foregone revenues from the 50-cent fees.

Portland State encourages students to use the Higher One-provided service to transfer financial aid funds to their own bank account, Gallagher says. Materials passed out during financial aid seminars detail the different options students have and depositing aid into the actual Higher One account is just one. At PSU roughly a third of the student population direct their funds to the Higher One account, he says.

To read the full column click here.

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