An assembly bill regarding student loans was voted upon in the state senate on July 3. The bill called AB 1162 was to hold banks accountable for their overzealous fees on students. It became defunct when the vote was tallied at two yes, three no, and four non-recorded.

Assembly member from District 11, Jim Frazier, was the sponsor of this call to action. According to the summary of the bill by Frazier, the bill wanted to “ensure that students are protected from banks and financial firms that contract with colleges and universities for campus-affiliated banking services.”

The biggest issues cited are the fees students with these prepaid debit cards face, including perswipe fees, inactivity fees, and PIN based fees.

“Colleges and universities must set in place regulations for campus debit card programs to ensure that students are not unfairly targeted or have marketing forced upon them,” Frazier wrote as the solution in his summary of AB 1162.

The State Senate hearing that occurred on July 3 is available online at calchannel, where these testimonies regarding the bill were collected.

One of these being from Foothills Community College District student, Emily Kinner, who stated that “Students are charged to activate their cards, charged not to use their card, [there are] fees for inactivity, activity, and replacing the card. Students are charged every time they use it as debit and students are even charged to withdraw money out of an ATM that is not campus based. And they’re charged to even find out how much money they have in their account.”

During the Senate Hearing of AB 1162, Alex Alanis representing the California Bankers Association stated his reasons of opposition for the bill, mostly delegitimizing the premise of its objective.

“Under the Card Act of 2009… a card issuer is prohibited from charging any dormancy fees until the 13th month after any kind of activity has occurred,” Alanis said. “So it’s virtually impossible to have a dormancy fee charged because every semester or quarter an activity is taking place on that card thereby resetting the clock.”

“In respect to inaccurate PIN fees, well that’s got to be the newest thing I’ve ever heard of in my entire life,” Alanis continues “I don’t know if anybody’s actually ever gone to any kind of ATM and imputed an incorrect Pin and got
charged. That’s new to me.”

“Overdraft fees on ATM transactions go for everybody,” Alanis said. “That is for every single card, the one that’s in all of our wallets or your purses today. That’s protected on the electronic transfer act. You’re required to sign up for overdraft protection onto an account during account origination.

Every time a transaction ora fee maybe occurred you’re then required to opt out if you choose to. So there are many opportunities to avoid this fee.”

Skyline College’s Regina Morrison, the Director of Financial Aid, made a statement in response to the bill.

“Most institutions put together committees to do their due diligence before meeting with vendors to see which best fits the needs of their student population; i.e. who offers less fee’s to students, good customer service, convenience to funds (ATM’s) and options for students such as: Direct Deposit/ Debit Cards or Paper Check,” Morrison wrote via email. “It is always about what is the best for students and the students right to choose. The San Mateo Community College District currently processes all Financial Aid refunds and students can either sign up for Direct Deposit or have a paper check mailed to them.”