Amended in Senate June 20, 2013

Amended in Assembly May 1, 2013

Amended in Assembly April 16, 2013

Amended in Assembly April 1, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 1162

Introduced by Assembly Member Frazier

February 22, 2013

An act to add Section 69505.6 to the Education Code, relating to student financial aid.

LEGISLATIVE COUNSEL’S DIGEST

AB 1162, 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 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. The bill would encourage postsecondary educational institutions to consider specified issues in adopting their policies. begin insert The bill would require the policies adopted to ensure that contracts between postsecondary educational institutions and banks or other financials institutions to disburse a student’s financial aid award do certain things, including: ensure that a student does not incur any cost in opening the account or initially receiving the debit card, prepaid card, or preloaded card; ensure that a student has convenient access to a branch office of the bank or an automated teller machine, as specified; ensure that the debit card, prepaid card, and preloaded card can be widely used; and to not market or portray the account or debit card, prepaid card, or preloaded card as a credit card or credit instrument, or to subsequently convert the card to a credit card or credit instrument. 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:

SECTION 1.  

Section 69505.6 is added to the Education Code,
to read:

69505.6.  

begin insert (a) end insert begin insert   end insert 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. begin delete Postsecondary end delete

begin insert (b) end insert begin insert   end insert begin insert Postsecondary end insert educational institutions are encouraged to
consider all of the following in adopting their policies:

begin delete

(a)

end delete

begin insert (1) end insert  Whether to provide students a clear and unbiased choice of
where to bank by ensuring that students can elect to receive their
financial aid begin delete award end delete begin insert awards end insert and other refunds through their own
bank begin delete account end delete begin insert accounts end insert or on begin delete a check end delete begin insert checks end insert and that students not
be subjected to paperwork that attempts to direct them to banking
options favored by the bank or financial institution with which the
institution is partnering.

begin delete

(b)

end delete

begin insert ( end insert begin insert 2) end insert  Whether to require at least one fee-free regularly replenished
automated teller machine to be placed on a participating campus
or satellite campus, and additional fee-free regularly replenished
automated teller machines placed on campuses in high enough
concentration to avoid students having to use multiple automated
teller machines, begin delete with end delete begin insert at end insert which a student may use his or her debit
card, prepaid card, or preloaded card to access his or her financial
aid award and other refunds.

begin delete

(c)

end delete

begin insert (3) end insert  Whether to prohibit debit card, prepaid card, or preloaded
card use from imposing fees common to students, including, but
not limited to:

begin delete

(1)

end delete

begin insert (A) end insert  Insufficient fund fees at automated teller machines or begin delete point end delete
begin insert points end insert of sale.

begin delete

(2)

end delete

begin insert (B) end insert  Account balance inquiry fees.

begin delete

(3)

end delete

begin insert (C) end insert  PIN-based transaction fees.

begin delete

(4)

end delete

begin insert (D) end insert  Inactive account fees.

begin delete

(5)

end delete

begin insert (E) end insert  Replacement card fees.

begin delete

(6)

end delete

begin insert (F) end insert  Transfer or wire fees.

begin delete

(7)

end delete

begin insert (G) end insert  Dispute fees.

begin delete

(8)

end delete

begin insert (H) end insert  Account closure fees.

begin delete

(d)

end delete

begin insert (4) end insert  Whether to require all debit card, prepaid card, or preloaded
card fees to be prominently displayed on the partnering bank or
financial institution’s Internet Web site or information mailed to
students.

begin delete

(e)

end delete

begin insert (5) end insert  Whether to prohibit the debit cards, prepaid cards, or
preloaded cards from being cobranded, which means including
the logo of the postsecondary educational institution.

begin delete

(f)

end delete

begin insert (6) end insert  Whether to require the debit cards, prepaid cards, or
preloaded cards and their contracts to include the same level of
consumer protections that are provided to automated teller machine
customers under the federal Electronic Fund Transfer Act (15
U.S.C. Sec. 1601 et seq.) as its exists on January 1, 2014.

begin delete

(g)

end delete

begin insert (7) end insert  Whether to prohibit debit card, prepaid card, or preloaded
card contracts from including mandatory arbitration clauses.

begin insert

(c) The policies adopted pursuant to subdivision (a) shall,
consistent with federal law, 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 do at
least all of the following:

end insert begin insert

(1) Ensure that the student does not incur any cost in opening
the account or initially receiving the debit card, prepaid card, or
preloaded card.

end insert begin insert

(2) (A) 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 withdrawals from
that office or those automated teller machines.

end insert begin insert

(B) The branch office or automated teller machines must 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.

end insert begin insert

(3) Ensure that the debit card, prepaid card, or preloaded card
can be widely used.

end insert begin insert

(4) Not market or portray the account or debit card, prepaid
card, or preloaded card as a credit card or credit instrument, or
subsequently convert the account or debit card, prepaid card, or
preloaded card to a credit card or credit instrument.

end insert