SACRAMENTO, CA – A bill to protect student’s financial aid from predatory bank fees has been introduced by Assemblymember Jim Frazier (D-Oakley). Assembly Bill 1162 requires college boards to adopt policies that best serve the needs of students when negotiating contracts with financial institutions to disburse a student’s financial aid onto debit cards.
As college and university budgets have shrunk, many have begun to use third-party servicers to disburse financial aid and issue credit balance refunds to students on debit cards. While many schools are obtaining revenues and reducing costs by outsourcing these services, the relationships between schools and financial institutions have raised questions because students end up bearing some costs directly.
In May 2012, the U.S. Public Interest Research Group released The Campus Debit Card Trap: Are Bank Partnerships Fair to Students, exposing companies and colleges engaging in this unfair practice.
“Colleges must set in place regulations for campus debit card programs to ensure that students are not unfairly targeted,” said Assemblymember Frazier. “In my book, charging our college students high fees for using their financial aid is a predatory practice that needs to be reformed.”
Assemblymember Frazier is leading the way to protect students with AB 1162 and has gained national recognition and support in a recent press release by Congressman George Miller (D-Contra Costa).
“I applaud Assemblymember Frazier for examining this important issue,” said Congressman Miller. “While I continue to have very deep concerns about financial aid disbursement cards, his new bill will help ensure that students’ limited financial aid dollars aren’t being pilfered by hidden fees and penalties. Congress and the states must do everything in their power to ensure banks play by the same rules on campus as they do off campus, and that schools enter any deals with financial institutions with their students’ best interest in mind.”
AB 1162 was approved by the Assembly Higher Education Committee with a 9-3 vote and will go on to be heard in the Assembly Appropriations Committee in May.
To contact Assemblymember Jim Frazier please visit his website at http://www.asmdc.org/members/a11/ or call his District Offices at 707-399-3011 or 925-778-5790, or his Capitol Office at 916-319-2011.