BILL ANALYSIS Ó SB 595 Page 1 Date of Hearing: August 14, 2013 ASSEMBLY COMMITTEE ON APPROPRIATIONS Mike Gatto, Chair SB 595 (Calderon) - As Amended: April 22, 2013 Policy Committee: Higher EducationVote:12-0 Urgency: No State Mandated Local Program: Yes Reimbursable: Yes SUMMARY This bill places conditions on the deposit of postsecondary education students' financial aid awards. Specifically, this bill: 1)Prohibits California Community Colleges (CCC) and California State University (CSU) campuses, as of January 1, 2014, from contracting with any depository institution that requires a student to open an account with that entity as a condition of receiving his or her financial aid disbursement. 2)Requires each CCC and CSU campus to: a) Offer a student the option of receiving his or her financial aid disbursement via direct deposit into a financial institution of the student's choosing. b) Ensure its contracts for financial aid disbursement, entered into after January 1, 2014, require the contracting entity to initiated the direct deposit within one business day of receiving financial aid disbursement moneys from the campus. 3)Requests the University of California (UC) to comply with all of the above. FISCAL EFFECT Negligible fiscal impact, as the segments all indicate their campuses are currently in compliance with the bill's requirements. SB 595 Page 2 COMMENTS Purpose . According to the author, banks and other financial firms are creating partnerships with colleges and universities to control the process of student aid disbursements. The author notes that the functionality of these partnerships allows students to access their funds in a suitable time frame. The author argues, however, that in some of these partnerships, students are required to open an account with the bank or financial firm in order to receive their financial aid funds. SB 595 prohibits the campus from entering into a contract with an entity that requires a student open an account with that entity, and would require the student be offered the opportunity to receive the disbursement via direct deposit within 24 hours following the financial entity's receipt of funds from the institution. Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081