BILL NUMBER: AB 1927 AMENDED
BILL TEXT
AMENDED IN SENATE JULY 2, 2014
AMENDED IN SENATE JUNE 19, 2014
AMENDED IN SENATE JUNE 4, 2014
AMENDED IN ASSEMBLY MAY 5, 2014
AMENDED IN ASSEMBLY APRIL 10, 2014
INTRODUCED BY Assembly Member Frazier
FEBRUARY 19, 2014
An act to add Section 69505.7 to the Education Code, relating to
student financial aid.
LEGISLATIVE COUNSEL'S DIGEST
AB 1927, as amended, Frazier. Student financial aid: debit cards.
Existing law provides for the missions and functions of the
private and public segments of postsecondary education in the state.
Existing law establishes various student financial aid programs for
students attending all segments of postsecondary education.
This bill would require the Board of Governors of the California
Community Colleges and the Trustees of the California State
University, and would request the Regents of the University of
California and the governing bodies of accredited private nonprofit
and for-profit postsecondary educational institutions, to adopt
policies to be used for negotiating contracts between their
postsecondary educational institutions and banks and other financial
institutions to disburse a student's financial aid award and other
refunds onto a debit card, prepaid card, or preloaded card that best
serves the needs of the students for disbursements of
financial aid awards and other refunds onto debit cards, prepaid
cards, or preloaded cards . The bill would require the policies
to ensure that contracts between postsecondary educational
institutions and banks or other financial institutions to disburse a
student's financial aid award are consistent with certain provisions
of federal law, and, in addition, do certain other things, including
, prohibit prohibiting the sale or
sharing of personal information, as defined, that the student or the
postsecondary educational institution provides the bank or other
financial institution, as specified; prohibit
prohibiting the bank or other financial institution from
imposing a point-of-sale transaction fee on a student for the use of
the debit card, prepaid card, or preloaded card; provide
providing a clear and conspicuous disclosure to
students of all fees associated with the debit card, prepaid card, or
preloaded card; and require requiring
the postsecondary educational institution to disclose to students the
benefits and student responsibilities for
associated with all financial aid disbursement options offered
by the postsecondary educational institution. The bill would
provide for policies adopted under these provisions and associated
contracts with banks or other financial institutions to be publicly
available on the postsecondary educational institution's Internet Web
site.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 69505.7 is added to the Education Code, to
read:
69505.7. (a) The Board of Governors of the California Community
Colleges and the Trustees of the California State University shall,
and the Regents of the University of California and the governing
bodies of accredited private nonprofit and for-profit postsecondary
educational institutions are requested to, adopt policies to be used
for negotiating contracts between their postsecondary
educational institutions and banks and other financial institutions
to disburse a student's financial aid award and other refunds onto a
debit card, prepaid card, or preloaded card that best serves the
needs of the students for the disbursement of students'
financial aid awards and other refunds onto debit cards, prepaid
cards, or preloaded cards. These policies shall not be finalized
before public comment is sought and considered .
(b) The policies adopted pursuant to subdivision (a) shall
best serve the needs of students and ensure that contracts
between postsecondary educational institutions and banks or other
financial institutions to disburse a student's financial aid award
and other refunds onto a debit card, prepaid card, or preloaded card
meet both of the following sets of requirements:
(1) The policies shall ensure that those contracts are consistent
with federal law, including, but not limited to, provisions in
federal law that require these contracts to do all of the following:
(A) Ensure that the student does not incur any cost in
opening to open the account or initially
receiving receive the debit card,
prepaid card, or preloaded card, as provided in Section 668.164(c)(3)
(iv) of Title 34 of the Code of Federal Regulations, as
that section read on July 1, 2011.
(B) Ensure that the student has convenient access to a branch
office of the bank or an automated teller machine of the bank in
which the account was opened or of another bank, so that the student
does not incur any cost in making to make
withdrawals from that office or those automated teller
machines, and that the branch office or automated teller machines be
located on the postsecondary educational institution's campus, in an
institutionally owned or operated facility, or immediately adjacent
to and accessible from the campus, as provided in Section 668.164(c)
(3)(v) of Title 34 of the Code of Federal Regulations, as
that section read on July 1, 2011.
(C) Ensure that the debit card, prepaid card, or preloaded card
can be widely used, including ensuring that use of the card is
not limited by the card-issuing institution to particular vendors
as provided in Section 668.164(c)(3)(vi) of Title 34 of
the Code of Federal Regulations, as that section read on July
1, 2011.
(D) Forbid the marketing or portrayal of the account or debit
card, prepaid card, or preloaded card as a credit card or credit
instrument, and or the subsequent
conversion of the account or debit card, prepaid card, or preloaded
card to a credit card or credit instrument, as provided in Section
668.164(c)(3)(vii) of Title 34 of the Code of Federal
Regulations, as that section read on July 1, 2011.
(2) In addition to the requirements specified in paragraph (1),
the policies shall do at least all of the following:
(A) Prohibit revenue sharing between a postsecondary educational
institution and banks or other financial institutions. For the
purpose of this su bparagraph, "revenue sharing" means an
arrangement between a postsecondary educational institution and a
bank or other financial institution pursuant to which the
postsecondary educational institution recommends, promotes, utilizes,
sponsors, or otherwise endorses the bank or other financial
institution or the debit card, prepaid card, or preloaded card issued
by the bank or other financial institution and, in exchange, the
bank or other financial institution pays a fee or provides other
material benefits, including revenue or profit sharing, to the
postsecondary educational institution or an officer,
employee, or agent of the postsecondary educational institution.
(B) Prohibit the sale or sharing of personal information, as
defined in paragraph (1) of subdivision (d) of Section 1798.81.5 of
the Civil Code, that the student or the postsecondary educational
institution provides the bank or other financial institution, unless
it is necessary for the purpose of providing services related to the
opening or maintenance of a debit card, prepaid card, or preloaded
card account. The personal information disclosed by the postsecondary
educational institution or solicited by the bank or other financial
institution, and the treatment of that information, shall be
consistent with the federal Family Educational Rights and Privacy Act
of 2001 (20 U.S.C. Sec. 1232g).
(C) Prohibit the bank or other financial institution from imposing
a point-of-sale transaction fee on a student for the use of the
debit card, prepaid card, or preloaded card.
(D) Provide Require the card-issuing bank
or other financial institution to provide a clear and
conspicuous disclosure to students of all fees associated with the
debit card, prepaid card, or preloaded card in no less than
10-point font, before they opt to open an account or receive a debit
card, prepaid card, or preloaded card issued by that bank or
financial institution, and to provide a readily accessible
link to a printable version of this fee list from the homepage of
the Internet Web site of the bank or other financial institution
.
(E) If the debit card, prepaid card, or preloaded card is
cobranded, require the card-issuing bank or other financial
institution to provide a clear and conspicuous disclosure to
students in no less than 10-point font, before they opt to open
an account or receive a debit card, prepaid card, or preloaded card
issued by that bank or financial institution, that the card is
not endorsed by the postsecondary educational institution.
(F) Require the postsecondary educational institution to disclose
to students the benefits and student responsibilities for
associated with all financial aid disbursement
options offered by the postsecondary educational institution.
(c) The policies adopted pursuant to subdivision (a) shall only
apply to negotiating contracts between a bank or other financial
institution and a postsecondary educational institution for purposes
of disbursing a student's financial aid award and other refunds onto
a debit card, prepaid card, or preloaded card.
(d) For purposes of this section, a "bank or other financial
institution" includes, but is not limited to, a depository
institution or an entity that partners with one or more depository
institutions.
(c) The Board of Governors of the California Community Colleges
and the Trustees of the California State University shall, and the
Regents of the University of California and the governing bodies of
accredited private nonprofit and for-profit postsecondary educational
institutions are requested to, make publicly available on their
respective Internet Web sites every policy developed pursuant to
subdivisions (a) and (b) and every binding contract negotiated by a
postsecondary educational institution under the jurisdiction of one
of these governing bodies with a financial institution for
disbursement of students' financial aid awards and other refunds onto
debit cards, prepaid cards, or preloaded cards.
(d) This section shall only apply to contracts between
postsecondary educational institutions and entities, whether specific
depository institutions, financial institutions, or entities that
partner with one or more depository institutions or financial
institutions, for the direct disbursement of students' financial aid
awards and other refunds onto debit, prepaid, or preloaded cards that
are established or opened as an integrated feature of the financial
aid award disbursement process.