Amended in Senate April 3, 2014

Amended in Senate February 25, 2014

Senate BillNo. 845


Introduced by Senator Correa

January 8, 2014


An act to add Section 69505.8 to the Education Code, relating to postsecondary education.

LEGISLATIVE COUNSEL’S DIGEST

SB 845, as amended, Correa. Postsecondary education: electronic disbursement of student financial aid.

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 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 each governing body of an accredited private postsecondary educational institution, to develop, in consultation with stakeholders, one or more model contracts for use at their respective systems for the disbursement of a financial aid award, scholarship, campus-based aid award, or school refund on a debit, prepaid, or preloaded cardbegin insert, and to make these contracts publicly available on their respective Internet Web sitesend insert.

The bill would also require that each model contract consider the best interests of students and containbegin delete certainend delete provisionsbegin insert end insertbegin insertthat reflect conditions required for compliance with federal regulations governing the disbursement of federal financial aidend insert.

begin insert

The bill would also require the board of governors and the trustees, and would additionally request the regents and each governing body of an accredited private postsecondary educational institution, when developing each of their respective model contracts, to consider specified information.

end insert

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

Section 69505.8 is added to the Education Code,
2to read:

3

69505.8.  

(a) The Board of Governors of the California
4Community Colleges and the Trustees of the California State
5University shall, and the Regents of the University of California
6and each governing body of an accredited private postsecondary
7educational institution are requested to, develop one or more model
8contracts for use at their respective systems for the disbursement
9of a financial aid award, scholarship, campus-based aid award, or
10school refund onto a debit card, prepaid card, or other preloaded
11card issued by a financial institution. Each model contract shall
12be developed in consultation with stakeholders including statewide
13 student associations, individual campuses, and financial institutions
14that issue debit cards, prepaid cards, and preloaded cards.

15(b) The board of governors and the trustees shall, and the regents
16and each governing body of an accredited private postsecondary
17educational institution are requested to, make every model contract
18developed under subdivision (a) publicly available on its Internet
19Web site.

20(c) Every model contract developed under subdivision (a) shall
21consider the best interests of students and shall, at a minimum,
22containbegin delete all of the following provisions:end deletebegin insert provisions that reflect
23conditions required for compliance with federal regulations
24governing the disbursement of federal financial aid.end insert

begin delete

25(1) The campus, educational system, or card-issuing financial
26institution shall not represent a debit card, prepaid card, or
27preloaded card as the only disbursement option available for a
28student to receive a financial aid award, scholarship, campus-based
29aid award, or school refund.

P3    1(2) A card-issuing financial institution shall provide a list of all
2debit card, prepaid card, or preloaded card fees to a student before
3that student may elect to receive a financial aid award, scholarship,
4campus-based aid award, or school refund on a debit card, prepaid
5card, or preloaded card. A card-issuing financial institution shall
6also provide a readily accessible link to a printable version of this
7fee list from the homepage on its Internet Web site.

8(3) A student who receives a financial aid award, scholarship,
9campus-based aid award, or school refund on a debit card, prepaid
10card, or preloaded card shall not be charged for any of the
11following:

12(A) Opening a debit card, prepaid card, or preloaded card
13account.

14(B) Receiving an initial debit card, prepaid card, or preloaded
15card.

16(C) Having a financial aid award, scholarship, campus-based
17aid award, or school refund deposited on a debit card, prepaid card,
18or preloaded card.

19(4) A card-issuing financial institution shall locate at least one
20branch office or automated teller machine on or immediately
21adjacent to the contracting campus, at which fee-free withdrawals
22may be made using the card.

23(5) A card-issuing financial institution, campus, or educational
24system shall not market a debit card, prepaid card, preloaded card,
25or card account as a credit card or credit instrument or convert the
26card or account into a credit card or credit instrument.

27(6) A card-issuing financial institution, campus, or educational
28system shall not represent placement of the name or mascot of a
29campus or educational system on a debit card, prepaid card, or
30preloaded card as an endorsement of that card by the campus or
31educational system.

end delete

32(d) When developing each model contract, the board of
33governors and the trustees shall, and the regents and each governing
34body of an accredited private postsecondary educational institution
35are requested to, consider all of the following:

36(1) The number of on-campus locations and proximity of
37off-campus locations where a fee-free withdrawal could be made
38by a student using a debit card, prepaid card, or preloaded card.

39(2) The type and size of fees a student would incur from debit,
40prepaid, or preloaded card usebegin insert and whether provisions of theend insertbegin insert model
P4    1contractend insert
begin insert ensure that the educational institution is provided
2information by the card-issuing financial institution to evaluate
3the costs of these fees to studentsend insert
.

4(3) The impact, if any, that offering a card displaying the name
5or mascot of a campus or educational system would have on
6students, that campus, or that educational system.

begin insert

7(4) Whether provisions of the model contract ensure that the
8educational institution monitors compliance by the financial
9institution with federal Title IV requirements governing the
10disbursement of financial aid.

end insert
begin insert

11(5) Whether provisions of the model contract ensure a process
12for the tracking and resolution of student complaints about the
13card-issuing financial services institution’s credit delivery,
14customer service, and debit, prepaid, or preloaded cards.

end insert
begin delete

15(4)

end delete

16begin insert(6)end insert The impact, if any, of the content of a dispute resolution
17clause on students, their campus, and their educational system, if
18a conflict were to arise between a student and the card-issuing
19financial institution.

begin insert

20(7) Whether provisions of the model contract ensure that the
21educational institution does not disclose student information to
22the card-issuing financial institution beyond what is necessary to
23perform the contracted financial aid disbursement function.

end insert
begin insert

24(8) Whether provisions of the model contract ensure that the
25card-issuing financial institution does not solicit or collect
26information from a student that is not necessary to perform the
27contracted financial aid disbursement function as a condition of
28the student accessing financial aid funds through a debit card,
29prepaid card, or preloaded card.

end insert


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