Amended in Senate July 2, 2014

Amended in Senate June 19, 2014

Amended in Senate June 4, 2014

Amended in Assembly May 5, 2014

Amended in Assembly April 10, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 1927

Introduced by Assembly Member Frazier

February 19, 2014

An act to add Section 69505.7 to the Education Code, relating to student financial aid.

LEGISLATIVE COUNSEL’S DIGEST

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 would 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 begin delete 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 end delete begin insert for disbursements of financial aid awards and other refunds onto debit cards, prepaid cards, or preloaded cards end insert . 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 are consistent with certain provisions of federal law, and, in addition, do certain other things, including begin delete , prohibit end delete begin insert prohibiting end insert the sale or sharing of personal information, as defined, that the student or the postsecondary educational institution provides the bank or other financial institution, as specified; begin delete prohibit end delete begin insert prohibiting end insert 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; begin delete provide end delete begin insert providing end insert a clear and conspicuous disclosure to students of all fees associated with the debit card, prepaid card, or preloaded card; and begin delete require end delete begin insert requiring end insert the postsecondary educational institution to disclose to students the benefits and student responsibilities begin delete for end delete begin insert associated with end insert all financial aid disbursement options offered by the postsecondary educational institution. begin insert The bill would provide for policies adopted under these provisions and associated contracts with banks or other financial institutions to be publicly available on the postsecondary educational institution’s Internet Web site. 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 69505.7 is added to the Education Code,
to read:

69505.7.  

(a) 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 begin delete 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 end delete begin insert for the disbursement
of students’ financial aid awards and other refunds onto debit
cards, prepaid cards, or preloaded cards. These policies shall not
be finalized before public comment is sought and considered end insert .

(b) The policies adopted pursuant to subdivision (a) shall begin insert best
serve the needs of students and end insert 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 meet
both of the following sets of requirements:

(1) The policies shall ensure that those contracts are consistent
with federal law, including, but not limited to, provisions in federal
law that require these contracts to do all of the following:

(A) Ensure that the student does not incur any cost begin delete in opening end delete
begin insert to open end insert the account or initially begin delete receiving end delete begin insert receive end insert the debit card,
prepaid card, or preloaded card, as provided in Section
668.164(c)(3)(iv) of begin insert Title 34 of end insert the Code of Federal Regulations,
as that section read on July 1, 2011.

(B) 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 begin delete in making end delete begin insert to make end insert withdrawals
from that office or those automated teller machines, and that the
branch office or automated teller machines 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, as provided in Section
668.164(c)(3)(v) of begin insert Title 34 of end insert the Code of Federal Regulations,
as that section read on July 1, 2011.

(C) Ensure that the debit card, prepaid card, or preloaded card
can be widely used, begin insert including ensuring that use of the card is not
limited by the card-issuing institution to particular vendors end insert as
provided in Section 668.164(c)(3)(vi) of begin insert Title 34 of end insert the Code of
Federal Regulations, as that section read on July 1, 2011.

(D) Forbid the marketing or portrayal of the account or debit
card, prepaid card, or preloaded card as a credit card or credit
instrument, begin delete and end delete begin insert or end insert the subsequent conversion of the account or
debit card, prepaid card, or preloaded card to a credit card or credit
instrument, as provided in Section 668.164(c)(3)(vii) of begin insert Title 34
of end insert the Code of Federal Regulations, as that section read on July 1,
2011.

(2) In addition to the requirements specified in paragraph (1),
the policies shall do at least all of the following:

(A) Prohibit revenue sharing between a postsecondary
educational institution and banks or other financial institutions.
begin insert For the purpose of this subparagraph, “revenue sharing” means
an arrangement between a postsecondary educational institution
and a bank or other financial institution pursuant to which the
postsecondary educational institution recommends, promotes,
utilizes, sponsors, or otherwise endorses the bank or other financial
institution or the debit card, prepaid card, or preloaded card issued
by the bank or other financial institution and, in exchange, the
bank or other financial institution pays a fee or provides other
material benefits, including revenue or profit sharing, to the
postsecondary educational institution or an officer, employee, or
agent of the postsecondary educational institution. end insert

(B) Prohibit the sale or sharing of personal information, as
defined in paragraph (1) of subdivision (d) of Section 1798.81.5
of the Civil Code, that the student or the postsecondary educational
institution provides the bank or other financial institution, unless
it is necessary for the purpose of providing services related to the
opening or maintenance of a debit card, prepaid card, or preloaded
card account. The personal information disclosed by the
postsecondary educational institution or solicited by the bank or
other financial institution, and the treatment of that information,
shall be consistent with the federal Family Educational Rights and
Privacy Act of 2001 (20 U.S.C. Sec. 1232g).

(C) 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.

(D)  begin delete Provide end delete begin insert Require the card-issuing bank or other financial
institution to provide end insert a clear and conspicuous disclosure to students
of all fees associated with the debit card, prepaid card, or preloaded
card begin insert in no less than 10-point font, before they opt to open an
account or receive a debit card, prepaid card, or preloaded card
issued by that bank or financial institution, and to provide a readily
accessible link to a printable version of this fee list from the
homepage of the Internet Web site of the bank or other financial
institution end insert .

(E) If the debit card, prepaid card, or preloaded card is
cobranded, begin insert require the card-issuing bank or other financial
institution to end insert provide a clear and conspicuous disclosure to students
begin insert in no less than 10-point font, before they opt to open an account
or receive a debit card, prepaid card, or preloaded card issued
by that bank or financial institution, end insert that the card is not endorsed
by the postsecondary educational institution.

(F) Require the postsecondary educational institution to disclose
to students the benefits and student responsibilities begin delete for end delete begin insert associated
with end insert all financial aid disbursement options offered by the
postsecondary educational institution.

begin delete

(c) The policies adopted pursuant to subdivision (a) shall only
apply to negotiating contracts between a bank or other financial
institution and a postsecondary educational institution for purposes
of disbursing a student’s financial aid award and other refunds
onto a debit card, prepaid card, or preloaded card.

end delete begin delete

(d) For purposes of this section, a “bank or other financial
institution” includes, but is not limited to, a depository institution
or an entity that partners with one or more depository institutions.

end delete begin insert

(c) 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, make publicly available
on their respective Internet Web sites every policy developed
pursuant to subdivisions (a) and (b) and every binding contract
negotiated by a postsecondary educational institution under the
jurisdiction of one of these governing bodies with a financial
institution for disbursement of students’ financial aid awards and
other refunds onto debit cards, prepaid cards, or preloaded cards.

end insert begin insert

(d) This section shall only apply to contracts between
postsecondary educational institutions and entities, whether
specific depository institutions, financial institutions, or entities
that partner with one or more depository institutions or financial
institutions, for the direct disbursement of students’ financial aid
awards and other refunds onto debit, prepaid, or preloaded cards
that are established or opened as an integrated feature of the
financial aid award disbursement process.

end insert