Dec. 16 2015 11:15 AM

LCC, Gibson’s in legal fight over book voucher program

Lansing Community College and Gibson’s University Bookstore are battling in court over the college’s new book voucher program — a program Gibson’s says will ultimately kill its business and force it to close perhaps as early as the fall of the 2016 semester.

LCC said it just wanted to provide a no-cost advance for book purchases to students receiving federal financial aid. The program starts Thursday.

“Our goal is, and always has been, service to our students.

We want to provide them with the books that they need — at the lowest cost, so that they will be successful,” said Devon Bradley, public relations manager for the college. “This is part of a larger initiative in support of Open Educational Resources.”

Gibson’s sued LCC earlier this month in Circuit Court, claiming, among other things, that the college’s program violates antitrust laws and consumer protection laws. Judge Rosemarie Aquilina on Dec. 3 issued a temporary restraining order prohibiting LCC from beginning the program Dec. 17, but Judge Joyce Draganchuk reversed that decision last week, lifting the restraining order and clearing the way for the book voucher program to launch.

“The judge ruled that we didn’t meet the criteria for a temporary restraining order,” said Matt Buche, owner and manager of Gibson’s.

“That was our only chance to stop it for this term.” He is unsure about the future of his lawsuit.

The new program will offer qualified financial aid students up to $600 in credit to purchase books through a new online bookstore called MBS, a wholesale distributer based in Missouri. The money will be repaid when their federal aid arrives later in the semester.

Students receive their federal funds for books and other supplies through a Higher One card. The card is not mandatory, and students can instead receive a check from the college.

The Higher One card is essentially a debit/credit card. LCC pays the company to process its financial transactions with the students — $27,714 for the 2014-2015 school year. Higher One also makes money from the student through transaction fees.

In the past, LCC would advance students with up to $600 on their cards before they received their financial aid payment.

But there were fewer restrictions on how these cards were used and students could use that card at Gibson’s or other stores. Now students who want to use the Higher One book voucher will only be allowed to purchase books through MBS.

Students who want to use their financial aid award to purchase books from Gibson’s or Amazon or another student must cover the purchase themselves until their financial aid arrives. A calculator available on LCC’s website indicates an in-dis-trict student can expect to spend $1,160 a year on books and supplies.

The implementation of the MBS program could be devastating to Gibson’s, the company’s accountant said in an affidavit filed in Circuit Court.

“Gibson’s would not be able to continue as a viable business past the 2016 fall semester, if it did not continue to receive revenue derived from Higher One cards,” said Raymond Lemmen, the accountant.

He said about 18 percent of the company’s income is derived from Higher One transactions.

LCC officials say the MBS offerings are ultimately cheaper for the student because the company offers a guaranteed buy back price at the time of purchase. At the end of the semester, MBS holds an on campus buyback program, and pays the student that promised price.

Lisa Mazure, the controller at LCC, said students could expect to save as much as 70 percent on books through discounts from MBS and the promised buyback price.

Bradley said that the college will not receive any money from MBS, but any commission that would normally be given to the college will be applied as a discount to future book purchases through the program. She said it is unclear how much money MBS stands to make through the program as it has not launched yet.

College officials emphasized that MBS was selected through an open competitive bid process — a process that Gibson’s participated in, but lost.

In court filings, the college argued that “students are not obligated to use the book voucher,” but for some students who receive financial aid, they don’t see it that way.

“I am mostly upset because I didn’t get a chance to opt out,” said Chelsea Cole, 19, a social science major at LCC who depends on financial aid to pay for her classes. She works part time at a library.

While she said she was worried the new program might destroy Gibson’s, which she said she “loved,” she also acknowledged that she purchases her books online from another vendor at substantially lower prices.

How it works

Here’s how officials at the college say the program works and why they call it a “no cost contract.”

Let’s say Joe Smith is a student who has a financial aid award of $200. That $200 covers his books, supplies and classes. He signs up for credit hours totaling $70 leaving $130 to cover books and other costs. He then logs onto the MBS online portal for LCC and selects his books on Dec. 17, the first day he can that for next semester. He selects $30 worth of books through the bookstore. MBS, in turn, sends those books by mail a few days later. When Joe’s financial aid is credited to his financial aid card — provided by Higher One, a for profit company — that $30 MBS charged for his books is deducted along with his credit costs. So, Joe’s $200 financial aid package is reduced by $70 for his classes and $30 for his books, leaving Joe with $100 on his card. Joe receives that money on Feb. 4, after LCC officials have verified his enrollment in classes.

On the back end, MBS takes Joe’s $30 purchase and bills LCC for it. LCC, in turn, processes the bill, which can take weeks. By Feb. 4, LCC has received Joe’s actual federal financial aid.