One more reason why the Consumer Financial Protection Bureauneeds to look at prepaid debit cards:

College students are finding their scarce dollars eaten up by fees on the cards, which many schools are using for student IDs and to disburse financial aid, according to a new study by U.S. Public Interest Research Group.

PIRG says information about the contracts between colleges and the financial institutions that provide the cards to students isn’t widely available, but at least one school struck a deal worth millions to the college. And it appears these deals may come at the expense of students.

Fees vary, of course, but it seems like the industry tacks on a charge for everything imaginable.

Students can end up paying a fee for: reloading money on the card, overdrafts, checking balances, closing the account, inactivity, transferring money, replacing a lost card, using an ATM and attending class. Ok, I made that last one up.

PIRG checked out the 50 largest public universities, 50 largest community colleges and 20 largest private colleges. It found that schools had 900 deals with financial institutions, potentially affecting more than 9 million students. University of Maryland-College Park, Montgomery College and Community College of Baltimore County made the list, but none had such a debit card deal with a financial institution.

But Johns Hopkins University did, with a company called Higher One, the largest player in this market.

Here's what PIRG says about Higher One: “Higher One disburses financial aid tostudents at about 520 schools across the country, but has only about 600 ATMs in service. Without enough ATMs to properly handle the demand of students when funds are disbursed many will be forced to use ATMs out of Higher One’s network and incur fees. One student interviewed by the authors who attends a school using Higher One reported a line of over 50 students trying to access their financial aid in the days immediately after funds are disbursed. Furthermore, ATMs may be placed in areas that are not accessible 24 hours a day, 7 days a week, such as in buildings locked up on the weekends or overnight, forcing students to use foreign ATMs and pay fees....

'Higher One has three main sources of revenue. It receives 10% from higher education institutions, 10% from payment transaction revenue and 80% from account holder revenue(fees). In one of its most recent filing with the Securities and Exchange Commission, Higher One reported this portion of its income came from the following: 'interchange fees, ATM fees, non-sufficient funds fees, other banking services fees and convenience.' Accounting for all revenues, from 2007 to 2011, Higher One increased revenues by 630%, growing from $28 million to $176.3 million.”