On Campus, New Deals With Banks Mark Volchek, left, and Miles Lasater helped start Higher One, which is criticized for its fees. College campuses have long been attractive hunting grounds for financial institutions looking for new customers. In recent years, however, their efforts to woo students have gotten banks and other financial institutions in trouble with regulators. They are now effectively prohibited from providing gifts to students who sign up for credit cards. And the colleges themselves can no longer be paid by the lenders to steer students to student loans. But many colleges, struggling to offset cuts in state funds and under pressure to keep tuition down, are finding new ways to strike deals with financial institutions, by turning student IDs into debit cards and allowing lenders to take over disbursement of financial aid. Consumer advocates worry that financial firms are again profiting from unsuspecting students, by charging them fees and even gaining access to their financial aid funds. Now a prominent consumer group has tried to document the extent of the practice. In a report released on Wednesday, the group, the United States Public Interest Research Group Education Fund, found that nearly 900 colleges and universities have card partnerships with financial institutions; in some instances, the colleges receive hefty payments from banks for the exclusive access to students; in other instances, the schools save money by outsourcing financial functions to banks or other vendors. The participating schools include many of the nation's best-known universities and represent two out of every five college students, the report says. The list includes big public universities like the University of Florida and University of Michigan and private schools like the University of Pennsylvania and Northwestern. Since the financial institution's logo is often stamped on campus IDs, students may sign up for an account because they believe the university has endorsed the product, the report says. In some instances, students have to open an account if they want to obtain their funds quickly. "Campus debit cards are wolves in sheep's clothing," Rich Williams, higher education advocate for U.S. Public Interest Research Group Education Fund and lead author of the report, said in releasing the report. Students think they can access their dollars freely, but instead their aid is being eaten up in fees. Rohit Chopra, the student loan ombudsman for the Consumer Financial Protection Bureau, said students need to be aware of options other than the financial institution that has struck a deal with their college. "Students should know their low-cost options to access their student loans and scholarships," he said. Because we hear that many students don't always know that there are alternatives. And we want that to be clear for them. Federal financial aid is sent directly to colleges, which take the payments due and disburse the remainder to students. But now, many colleges have hired outside financial institutions to perform those functions and encourage students to keep their money with those institutions. As a result, banks and financial firms have "an unprecedented opportunity to market add-on products - bank accounts, A.T.M./debit cards and even loans and credit cards - to students with virtually no competition," the report said. Students may also be charged automated teller machine fees to access their financial aid funds. The biggest player in the field is Higher One, which was started by three Yale undergraduates in 2000 and now has contracts with 520 college campuses, the report says. The company's fees have prompted complaints at Western Washington University and a handful of other campuses. But Miles Lasater, one of the co-founders, said his company has provided a valuable service for colleges and universities and a good deal for students. Student accounts are meant to be free, he said, and students are charged only for optional services. For instance, account holders are charged $29 for overdrawing their account once and $38 for subsequent overdrafts, 50 cents for making a debit transaction using a personal identification number, and $2.50 for using a non-Higher One A.T.M. "I think the important thing is to compare it to the alternative," he said. The alternative for students isn't somehow magically nothing. The report highlighted a deal between Ohio State University and Huntington Bank, which pays the university $25 million in exchange for allowing it to open branches and A.T.M."s on campus and "exclusive access to directly offer tailored products and services to more than 600,000 students, faculty, staff and alumni," according to the university. Ohio State has called the partnership an innovative way to raise new revenue, since the state's contribution to the university budget has sharply declined. "It is important to note that it does not include marketing loans and credit cards to students," said a university spokeswoman Shelly Hoffman. Great care was given to make sure protections for students were built into this agreement. Mr. Williams, the report's author, said some of the deals may, in fact, be good for universities and students but too many lack transparency. The group released a similar report several years ago about credit card marketing on campus, before Congress curbed many of the worst abuses. Many of the same tactics are now being used by financial institutions to peddle debit cards: using university logos to market products, setting up tables at orientation, even giving free sweatshirts for students who sign up. "It's almost the same exact tricks - but it's totally legal," he said.