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The Northerner

Do you deserve a refund?: NKU could owe you money due to unauthorized credit card fees

Jesse Call

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As if tuition and fees were not high enough, many students wishing to pay tuition and fees to Northern Kentucky University must pay even more through a $15 convenience fee for the use of credit or debit cards for each transaction. However, one major credit company says that such a fee is unauthorized by policies and agreement with NKU and should not have been charged to students or parents.

“Visa does not allow universities to charge consumers an additional fee, or checkout fee, for using a Visa card. These fees do nothing more than shift universities’ cost of doing business onto students and parents,” the company said in a statement to The Northerner.

However, Visa acknowledged that some merchants are allowed to charge convenience fees when people use “alternate payment systems,” such as automated phone systems at movie theaters. However, Visa would not comment as to whether NKU’s system qualified as an alternate payment system. The company emphasized that these are fees charged by the merchant and not by Visa.

The Bursar’s office only accepts credit cards through an online system and refuses to take them at the window. Thus, students are left with no alternative but to pay the fee if they wish to use their Visa debit or credit card.

The $15 charged to students paying their tuition and fees to the Bursar’s Office does not cover the university’s costs for processing the transactions, according to Kenneth Ramey, NKU’s vice president for administration and finance.

“We are charged by the banks a percentage for every transaction that takes place. We charge the $15 to help offset part of the expense,” Ramey explained. “The $15 fee does not offset the credit card expense that we have.”

According to figures released to The Northerner by Ramey, in Fiscal Year 2010 the university was charged more than $378,500 in processing fees through the bursar’s office. In FY2009, it was more than $410,000.

For the same time periods, the bursar’s office only collected approximately $193,000 in FY2010 and approximately $202,000 in FY2009.

Ramey said he thought these fees charged by credit card companies would be shocking to students.

When asked whether the bursar’s office could continue accepting credit cards if they were prohibited from charging processing fees, Ramey said “it would be difficult to do.”

However, many other university services accept credit cards without charging any additional fees. This includes Parking Services, which had to pay more than $25,700 in processing fees in FY2010. Others include the All Card Office, Steely Library, the Bank of Kentucky Center and the NKU METS Center.

When asked why there was the additional charge for tuition and fees and not for things like parking and the All Card, Ramey responded that “it was just a decision that was made for the Bursar that there would be a percentage.”

A Student Government Association (SGA) official gives the NKU administration the benefit of the doubt.

“I believe NKU’s Bursar office would only charge students necessary costs and at the lowest rate possible,” said Chad Howe, chair of the SGA Finance Committee.

Nonetheless, the $15 fee is something the Finance Committee plans on investigating, according to Howe.

“I know NKU’s current administration is very dedicated to the student and all he/she experiences while they attend NKU,” Howe added.

However, the fee is $15 per transaction, which means that students that must use payment plans and must use a debit or credit card have to pay an extra $15 with each payment.

While Visa prohibits this practice, other major credit card companies are more accommodating. Discover and Mastercard both have policies similar to Visa; however, they have exceptions for tuition and fee payments charged by universities.

“Mastercard has put in place a convenience fee program for participating pre-certified government and education entities, or their third-party agents,” Sarah Ely, a company spokesperson, said.

“Many state funded institutions, including universities, are typically allowed to assess a convenience charge. This practice is consistent within the industry, since most government funded entities are required to collect the state authorized tuition/fees in full,” Discover Cards spokesperson Mai Lee Ua said.

The questions remain whether NKU can continue to charge this fee to Visa customers and whether it must (or is willing to) refund the unauthorized fees it collected to each Visa customer and whether it will continue to charge the additional fees to students using Mastercard or Discover.

Organizations like the Better Business Bureau often help customers who have been wrongfully charged, and customers can fill out an online form to make a local claim at http://cincinnati.bbb.org/. Students can also contact their state attorney general office or state legislators to file consumer complaints.

Students and parents may also have legal rights, according to Louisville attorney Jeremy Rogers.

Rogers said that if the practice is explicitly prohibited under their contractual agreement with the card company, then customers could likely sue as third-party beneficiaries for breach of contract. However, such action is unlikely given the legal costs associated with filing versus the amount of fees the customer would recover.

“These types of cases are usually class action,” Rogers said. This allows small claims to come together into one large claim and thus make the legal effort worthwhile for attorneys and clients.

Visa did not comment on what customers should do if they feel they have been wrongfully charged.

One other local university, instead of not assessing additional fees on students and parents, has chosen to no longer accept payments from Visa at its bursar’s office.

Xavier University in Cincinnati wrote this on its website, “While Visa is accepted in other venues on campus, it is not accepted as a form of payment towards a Bursar account. Visa has chosen not to participate in a percentage-based convenience fee program.”

Ramey said he thinks the fee is comparable to what other universities charge.

“I think if you checked around, our fee is very reasonable and less than what you’ll find at other places,” Ramey said.

The University of Cincinnati’s website says that students there are charged 2.5% of the amount they pay by credit card for tuition and fees.

The University of Louisville has a fee levels program where they charge $15 if the transaction is under $1000, with an additional $5 fee per thousand.

The question also remains if credit card companies will continue to allow additional charges against college students and add to the increasing costs of higher education.

Story by Jesse Call

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The Independent Student Newspaper of Northern Kentucky University.
Do you deserve a refund?: NKU could owe you money due to unauthorized credit card fees