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 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 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 do certain things, including, among other things, prohibit the sale or sharing of personal information, as defined, that the student or the postsecondary educational institution provides the bank or other financialbegin delete institution;end deletebegin insert institution, except as specified;end insert 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; provide a clear and conspicuous disclosure to students of all fees associated with the debit card, prepaid card, or preloaded card; ensure that a student does not incur any cost in opening
the account or initially receiving the card; not market or portray the account or card as a credit card or credit instrument, or subsequently convert the card to a credit card or credit instrument; and require the postsecondary educational institution to disclose to students the benefits and student responsibilities for all financial aid disbursement options offered by the postsecondary educational institution.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 69505.7 is added to the Education Code,
2to read:
(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 the governing bodies of accredited private nonprofit and
7for-profit postsecondary educational institutions are requested to,
8adopt policies to be used for negotiating contracts between their
9postsecondary educational institutions and banks and other
10financial institutions to disburse a student’s financial aid award
11and other refunds onto a debit card, prepaid card, or preloaded
12card that best serves the needs of the students.
13(b) The policies adopted pursuant to subdivision (a) shall,
14consistent
with federal law, including Section 668.164 of Title 34
15of the Code of Federal Regulations, ensure that contracts between
16postsecondary educational institutions and banks or other financial
17institutions to disburse a student’s financial aid award and other
18refunds onto a debit card, prepaid card, or preloaded card do at
19least all of the following:
P3 1(1) Prohibit revenue sharing between a postsecondary
2educational institution and banks or other financial institutions.
3(2) Prohibit the sale or sharing of personal information, as
4defined in paragraph (1) of subdivision (d) of Section 1798.81.5
5of the Civil Code, that the student or the postsecondary educational
6institution provides the bank or other financialbegin delete institution.end delete
7begin insert
institution, unless it is necessary for the purpose of providing
8services related to the opening or maintenance of a debit card,
9prepaid card, or preloaded card account.end insert
10(3) Prohibit the bank or other financial institution from imposing
11a point-of-sale transaction fee on a student for the use of the debit
12card, prepaid card, or preloaded card.
13(4) Provide a clear and conspicuous disclosure to students of
14all fees associated with the debit card, prepaid card, or preloaded
15card.
16(5) If the debit card, prepaid card, or preloaded card is
17cobranded, provide a clear and conspicuous disclosure to students
18that the card is not endorsed by the postsecondary
educational
19institution.
20(6) Ensure that the student does not incur any cost in opening
21the account or initially receiving the debit card, prepaid card, or
22preloaded card.
23(7) (A) Ensure that the student has convenient access to a branch
24office of the bank or an automated teller machine of the bank in
25which the account was opened or of another bank, so that the
26student does not incur any cost in making withdrawals from that
27office or those automated teller machines.
28(B) The branch office or automated teller machines must be
29located on the postsecondary educational institution’s campus, in
30an institutionally owned or operated facility, or immediately
31adjacent to and accessible from the
campus.
32(8) Ensure that the debit card, prepaid card, or preloaded card
33can be widely used.
34(9) Not market or portray the account or debit card, prepaid
35card, or preloaded card as a credit card or credit instrument, or
36subsequently convert the account or debit card, prepaid card, or
37preloaded card to a credit card or credit instrument.
38(10) Require the postsecondary educational institution to
39disclose to students the benefits and student responsibilities for all
P4 1financial aid disbursement options offered by the postsecondary
2educational institution.
3(c) The policies adopted pursuant to
subdivision (a) shall only
4apply to negotiating contracts between a bank or other financial
5institution and a postsecondary educational institution for purposes
6of disbursing a student’s financial aid award and other refunds
7onto a debit card, prepaid card, or preloaded card.
8(d) For purposes of this section, a “bank or other financial
9institution” includes, but is not limited to, a depository institution
10or an entity that partners with one or more depository institutions.
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