Bill Text: CA AB1927 | 2013-2014 | Regular Session | Enrolled
Bill Title: Student financial aid: debit cards.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Vetoed) 2014-09-29 - Vetoed by Governor. [AB1927 Detail]
Download: California-2013-AB1927-Enrolled.html
BILL NUMBER: AB 1927 ENROLLED
BILL TEXT
PASSED THE SENATE AUGUST 27, 2014
PASSED THE ASSEMBLY AUGUST 28, 2014
AMENDED IN SENATE AUGUST 19, 2014
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
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, 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, including
the Ortiz-Pacheco-Poochigian-Vasconcellos Cal Grant Program (Cal
Grant Program), which establishes the Cal Grant A and B Entitlement
Awards, the California Community College Transfer Cal Grant
Entitlement Awards, the Competitive Cal Grant A and B Awards, the Cal
Grant C Awards, and the Cal Grant T Awards under the administration
of the Student Aid Commission, and establishes eligibility
requirements for awards under these programs for participating
students attending qualifying institutions.
This bill would require the Board of Governors of the California
Community Colleges, the Trustees of the California State University,
the Regents of the University of California, and the governing bodies
of accredited private nonprofit and for-profit postsecondary
educational institutions, as a condition for participation in the Cal
Grant Program, to adopt policies to be used for negotiating
contracts for disbursements of financial aid awards and other refunds
onto debit cards, prepaid cards, or preloaded cards. 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 prohibiting 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; prohibiting 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; providing a clear and conspicuous disclosure to students of all
fees associated with the debit card, prepaid card, or preloaded
card; and requiring the postsecondary educational institution to
disclose to students the benefits and student responsibilities
associated with all financial aid disbursement options offered by the
postsecondary educational institution. 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.
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) As a condition for participation in the Cal Grant
Program established pursuant to Chapter 1.7 (commencing with Section
69430), the Board of Governors of the California Community Colleges,
the Trustees of the California State University, the Regents of the
University of California, and the governing bodies of accredited
private nonprofit and for-profit postsecondary educational
institutions shall adopt policies to be used for negotiating
contracts 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.
(b) The policies adopted pursuant to subdivision (a) shall best
serve the needs of students and 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 to open the
account or initially receive the debit card, prepaid card, or
preloaded card, as provided in Section 668.164(c)(3)(iv) of Title 34
of 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 to make 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 Title 34 of 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, including ensuring that use of the card is not
limited by the card-issuing institution to particular vendors as
provided in Section 668.164(c)(3)(vi) of Title 34 of 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, or 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 Title 34 of
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. 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.
(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) Require the card-issuing bank or other financial institution
to provide a clear and conspicuous disclosure to students of all fees
associated with the debit card, prepaid card, or preloaded card 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.
(E) If the debit card, prepaid card, or preloaded card is
cobranded, require the card-issuing bank or other financial
institution to provide a clear and conspicuous disclosure to students
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, 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 associated with
all financial aid disbursement options offered by the postsecondary
educational institution.
(c) The Board of Governors of the California Community Colleges,
the Trustees of the California State University, the Regents of the
University of California, and the governing bodies of accredited
private nonprofit and for-profit postsecondary educational
institutions shall 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.
(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.
