Credit cards and debit cards have generated lots of controversy, but so-called loan cards have sailed under the radar. These cards, which were not included in recent card reform legislation, allow students to access their student loans, beyond the amount reserved for tuition, reports the Washington Post. In many ways, they are basically debit cards that access loans.

Business is strong for the likes of Connecticut-based Higher One. It has signed up 675 colleges across the country. It offered stock to the public and raised $124 million this summer. Quarterly revenue has hit $27 million, more than double year over year, according to the Washington Post.

But some people are questioning its fee practices. "Higher One charges students a $19 monthly penalty for accounts that aren't used for nine months, a practice now banned for credit cards," notes the Post. "On its Web site, rival PNC Bank tells schools that setting up tables on campus to market its product to students may be required for a successful program--this is another tactic that was restricted under the credit card law."

"The legislation also requires colleges to submit their contracts with credit card companies to the Federal Reserve, which must issue a public report," according to the Post. "Loan cards are not included." 

We may hear more about these loan cards--especially if more students end up drawing down their loan faster than they anticipated.

For more:
- here's the article

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