January 11, 2006

Corporate U.

The latest in "convenience" for students from the collaboration of university and corporations: someone else holds onto your financial aid money until they're sure you're not going to spend it at their store! And they call it the "Reserve Convenience Account."

Sounds great, doesn't it?

I'd give you a link, but our local paper that ran the story requires a paid subscription, and it's not worth it. Here's the gist.

If a student has excess financial aid money after covering tuition and student housing, normally the student gets a check for the balance. According to the news story out today, the new plan with Barnes and Noble "withholds up to $500 of students' refund checks." The campus bookstore - which is run by Barnes and Noble - likes this because it "streamlines" their billing process, and "cuts down on the paperwork." Students who paid for their books using their financial aid used to have to go through a special line at the bookstore (gasp!) and fill out a form (the horror!). Now they can go through any line.

No doubt it is ever so slightly easier for the students because they don't have to actually look which line they are in (an onerous task, for sure). The primary beneficiaries seem to be the paper pushers at the university - and here I'll guess that it's not just our university - and Barnes and Noble.

I just have one question though.

When that money is just sitting around, being held, waiting to be used... who gets the interest it earns? If it was sitting in the students' interest bearing checking accounts, they would. It wouldn't be much, but it would be theirs. Think of it... on a campus of 25,000, if they held back $500 bucks per student, that would be $12.5 million. What's the going rate on short term interest? I have no idea if either universities or Barnes and Noble get the interest, but the students are not getting it from depositing the check in their savings accounts.

But it's convenient!

Unless you are a competitor, already suffering from the official contract Barnes and Noble has with the university that is supposed to direct traffic to them the campus bookstore managed by Barnes and Noble. [Side note, our campus has an exclusive Coke contract too. No Pepsi products are allowed in any vending machines.]

And unless you are a student, of course, who has to wait for your money. Some students, bless their suspicious little souls, are upset about having to get involved with oversight, tracking down if money was held, how much, for how long, and making sure it is eventually returned.

Convenient!

Posted by binky at January 11, 2006 11:37 PM | TrackBack | Posted to The Academy


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