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California Association of Private Postsecondary Schools

A.B. 1927 - Governance & State Oversight

05/06/2014

Sponsor: Assemblymember Jim Frazier (D)

Summary: Requires the Board of Governors of the California Community Colleges and the Trustees of the California State Universities, and requests 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.

Requires the policies adopted to ensure that contracts between postsecondary educational institutions and banks or other financial institutions to disburse a student’s financial aid award to:
(1) Prohibit revenue sharing between a postsecondary educational institution and banks or other financial institutions.
(2) Prohibit the sale or sharing of personal information that the student or the postsecondary educational institution provides the bank or other financial institution.
(3) Prohibit the debit card, prepaid card or preloaded card use from imposing point-of-sale transaction fees.
(4) Provide a clear and conspicuous disclosure to students of all fees associated with the debit card, prepaid card or preloaded card.
(5) Ensure that the student does not incur any cost in opening the account or initially receiving the debit card, prepaid card or preloaded card.
(6) 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.
(7) Ensure that the debit card, prepaid card or preloaded card can be widely used.
(8) 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.
(9) Prohibits a bank or other financial institution from imposing a fee on a student for the use of a debit card, prepaid card or preloaded card.
(10) Requires any fees imposed by the bank or other financial institution to be paid by the postsecondary educational institution.
(11) Requires 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.

Amendment #2 (5/5/2014): http://www.leginfo.ca.gov/pub/13-14/bill/asm/ab_1901-1950/ab_1927_bill_20140505_amended_asm_v97.pdf

Amendment #1 (4/10/2014): http://www.leginfo.ca.gov/pub/13-14/bill/asm/ab_1901-1950/ab_1927_bill_20140410_amended_asm_v98.pdf

Introduced: http://www.leginfo.ca.gov/pub/13-14/bill/asm/ab_1901-1950/ab_1927_bill_20140219_introduced.pdf

Status: Introduced 2/19/2014. Referred to Assembly Committee on Higher Education and Assembly Committee on Banking and Finance 2/27/2014. Hearing held, reported 4/1/2014. Withdrawn, amended, re-referred to Assembly Committee on Banking and Finance. Hearing held 4/21/2014. Hearing held, reported; re-referred to Committee on Appropriations 4/28/2014. Amended 5/5/2014.

Outlook: This measure was withdrawn by the sponsor, amended and re-referred to the Assembly Committee on Appropriations. The author's amendment requires the policies adopted to ensure that contracts between postsecondary educational institutions and banks or other financial institutions to disburse a student’s financial aid award to provide a clear and conspicuous disclosure to students of all fees associated with the debit card, prepaid card or preloaded card; as well as, requires 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. Per Joint Rule 61(b)(8), the committee has by May 23 to act on this measure.

After allowing for public testimony, the Assembly Committee on Banking and Finance recommended this measure for passage by a 7-3 vote. This measure will next be referred to the Assembly Committee on Appropriations for consideration. As this measure contains fiscal provisions it must be approved by the Appropriations Committee before it may be considered by the full chamber.

During the April 21 hearing, the California Communities United Institute, CALPIRG, The Student Senate for California Community Colleges and the University of California Student Association registered in support of the measure. The California Bankers Association and Higher One registered in opposition to this measure.

This measure was withdrawn by the sponsor, amended and re-referred to the Assembly Government Organization Committee. The author's amendment prohibits a bank or other financial institution from imposing a fee on a student for the use of a debit card, prepaid card or preloaded card. The author's amendment also requires any fees imposed by the bank or other financial institution to be paid by the postsecondary educational institution.

During the April1 hearing of the Assembly Committee on Higher Education, this measure was reported favorably by a 9-4 vote. The sponsor introduced this measure as an effort to protect students by ensuring financial aid money they receive goes to the purpose for which they were allocated and not exorbitant fees set by financial institutions. Representatives of the Student Senate for California Community Colleges and California Public Interest Research Group testified in favor of the measure.

The Assembly Committee on Judiciary is chaired by Assembly Member Das Williams (D). Committees are not required to consider every measure referred to them.

The sponsor is a member of the majority party but has not garnered the support of any cosponsors. The Democratic Party controls both legislative chambers as well as the Office of Governor.

*Information provided by www.stateside.com