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, andbegin insert wouldend insert 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 awardbegin insert are consistent withend insertbegin insert certain provisions of federal law, and, in addition,end insert do certainbegin insert otherend insert things, including,begin delete among other things,end delete prohibit the sale or sharing of personal information, as defined, that the student or the postsecondary educational institution provides the bank or other
financial institution,begin delete exceptend delete as specified; 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;begin delete 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;end delete 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)begin delete shall,
14consistent
with federal law, including Section 668.164 of Title 34
15of the Code of Federal Regulations,end delete
16between postsecondary educational institutions and banks or other
17financial institutions to disburse a student’s financial aid award
P3 1and other refunds onto a debit card, prepaid card, or preloaded
2cardbegin delete do at least all of the following:end deletebegin insert meet both of the following sets
3of requirements:end insert
4(1) The policies shall ensure that those contracts are consistent
5with federal law, including, but not
limited to, provisions in federal
6law that require these contracts to do all of the following:
7(A) Ensure that the student does not incur any cost in opening
8the account or initially receiving the debit card, prepaid card, or
9preloaded card, as provided in Section 668.164(c)(3)(iv) of the
10Code of Federal Regulations, as that section read on July 1, 2011.
11(B) Ensure that the student has convenient access to a branch
12office of the bank or an automated teller machine of the bank in
13which the account was opened or of another bank, so that the
14student does not incur any cost in making withdrawals from that
15office or those automated teller machines, and that the branch
16
office or automated teller machines be located on the
17postsecondary educational institution’s campus, in an
18institutionally owned or operated facility, or immediately adjacent
19to and accessible from the campus, as provided in Section
20668.164(c)(3)(v) of the Code of Federal Regulations, as that section
21read on July 1, 2011.
22(C) Ensure that the debit card, prepaid card, or preloaded card
23can be widely used, as provided in Section 668.164(c)(3)(vi) of
24the Code of Federal Regulations, as that section read on July 1,
252011.
26(D) Forbid the marketing or portrayal of the account or debit
27card, prepaid card, or preloaded card as a credit card or credit
28instrument, and the
subsequent conversion of the account or debit
29card, prepaid card, or preloaded card to a credit card or credit
30instrument, as provided in Section 668.164(c)(3)(vii) of the Code
31of Federal Regulations, as that section read on July 1, 2011.
32(2) In addition to the requirements specified in paragraph (1),
33the policies shall do at least all of the following:
34(1)
end delete
35begin insert(A)end insert Prohibit revenue sharing between a
postsecondary
36educational institution and banks or other financial institutions.
37(2)
end delete
38begin insert(B)end insert Prohibit the sale or sharing of personal information, as
39defined in paragraph (1) of subdivision (d) of Section 1798.81.5
40of the Civil Code, that the student or the postsecondary educational
P4 1institution provides the bank or other financial
institution, unless
2it is necessary for the purpose of providing services related to the
3opening or maintenance of a debit card, prepaid card, or preloaded
4card account.begin insert The personal information disclosed by the
5postsecondary educational institution or solicited by the bank or
6other financial institution, and the treatment of that information,
7shall be consistent with the federal Family Educational Rights and
8Privacy Act of 2001 (20 U.S.C. Sec. 1232g).end insert
9(3)
end delete
10begin insert(C)end insert 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)
end delete
14begin insert(D)end insert Provide a clear and conspicuous disclosure to students of
15all fees associated with the debit card, prepaid card, or preloaded
16card.
17(5)
end delete
18begin insert(E)end insert If the debit card, prepaid card, or preloaded card is
19cobranded, provide a clear and conspicuous disclosure to students
20that the card is not endorsed by the postsecondary educational
21institution.
22(6) Ensure that the student does not incur any cost in opening
23the account or initially receiving the debit card, prepaid card, or
24preloaded card.
25(7) (A) Ensure that the student has convenient access to a branch
26office of the bank or an automated teller machine of the bank in
27which the account was opened or of another bank, so that the
28student does not incur any cost in making withdrawals from that
29office or those automated teller machines.
30(B) The branch office or automated teller machines must be
31located on the postsecondary educational institution’s campus, in
32an institutionally owned or operated facility, or immediately
33adjacent to and accessible from the
campus.
34(8) Ensure that the debit card, prepaid card, or preloaded card
35can be widely used.
36(9) Not market or portray the account or debit card, prepaid
37card, or preloaded card as a credit card or credit instrument, or
38subsequently convert the account or debit card, prepaid card, or
39preloaded card to a credit card or credit instrument.
40(10)
end delete
P5 1begin insert(F)end insert Require the postsecondary educational
institution to disclose
2to students the benefits and student responsibilities for all financial
3aid disbursement options offered by the postsecondary educational
4institution.
5(c) The policies adopted pursuant to subdivision (a) shall only
6apply to negotiating contracts between a bank or other financial
7institution and a postsecondary educational institution for purposes
8of disbursing a student’s financial aid award and other refunds
9onto a debit card, prepaid card, or preloaded card.
10(d) For purposes of this section, a “bank or other financial
11institution” includes, but is not limited to, a depository institution
12or an entity that partners with one or more depository institutions.
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