SENATE BILL REPORT

HB 1499

This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.

As Passed Senate, February 27, 2018

Title: An act relating to creating protections and fairness for students in the student loan disbursement process.

Brief Description: Creating protections and fairness for students in the student loan disbursement process.

Sponsors: Representatives Pollet, Ryu, Sells, Lovick, Bergquist and Stanford.

Brief History: Passed House: 3/03/17, 96-1; 1/11/18, 98-0.

Committee Activity: Higher Education: 3/21/17, 3/28/17 [DP-WM].

Ways & Means: 3/30/17, 4/03/17.

Higher Education & Workforce Development: 2/15/18, 2/20/18 [DP].

Floor Activity:

Passed Senate: 2/27/18, 49-0.

Brief Summary of Bill

  • Creates notice and other requirements applicable to postsecondary institutions that use third-party servicers or financial institutions to disburse financial aid refunds to students.

  • Requires the Washington Student Achievement Council (WSAC) to have rules ensuring that contracts between institutions and third-party servicers or financial institutions are in the best financial interest of the students and meet other criteria.

SENATE COMMITTEE ON HIGHER EDUCATION

Majority Report: Do pass and be referred to Committee on Ways & Means.

Signed by Senators Wilson, Chair; Bailey, Vice Chair; Palumbo, Ranking Minority Member; Frockt.

Staff: Clint McCarthy (786-7319)

SENATE COMMITTEE ON WAYS & MEANS

Staff: Julie Murray (786-7711)

SENATE COMMITTEE ON HIGHER EDUCATION & WORKFORCE DEVELOPMENT

Majority Report: Do pass.

Signed by Senators Ranker, Chair; Palumbo, Vice Chair; Hawkins, Ranking Member; Carlyle, Liias, Miloscia, Nelson and Short.

Staff: Kellee Gunn (786-7429)

Background: Postsecondary institutions receiving federal financial aid must comply with federal regulations regarding the disbursement of funds. After the institution credits the student's account for tuition and fees and other allowable charges, any aid that is left must be paid to the student within a certain time. An institution may issue a check to the student, directly deposit the funds into a student's bank account, or contract with a third-party servicer or financial institution to process the refunds to students on behalf of the institution. Third-party servicers or financial institutions may provide the student's refund on a debit card or other access device.

Recently enacted federal regulations created new requirements for institutions using a third-party servicer or financial institution to process federal financial aid refunds to students. In general, the new requirements include the following:

Summary of Bill: Postsecondary institutions, and any-degree granting institution, for profit institution, or for-profit vocational institute operating in Washington State and that disburses a student's federal and state financial aid must comply with certain requirements regarding disbursement. The postsecondary institution must:

Federal regulations applicable to federal financial aid disbursements using third-party servicers or financial institutions also apply to the disbursement of state financial aid.

WSAC must have rules and other requirements regarding contracts between postsecondary institutions and financial institutions or third-party servicers for the disbursement of student financial aid. The rules imposed by WSAC must:

WSAC must compile a list of all postsecondary institutions that use third-party servicers or financial institutions for student financial aid disbursements and provide it on their website.

Appropriation: None.

Fiscal Note: Available.

Creates Committee/Commission/Task Force that includes Legislative members: No.

Effective Date: Ninety days after adjournment of session in which bill is passed.

Staff Summary of Public Testimony (Higher Education): Testimony from 2017 Regular Session. PRO: This is a simple bill that safeguards students from having to pay fees. The biggest point of this bill is that money should be going to the students and not to financial institutions or third party servicers. A state resource should stay in the hands of students and not be syphoned off to banks and corporations.

Persons Testifying (Higher Education): PRO: Representative Gerry Pollet, Prime Sponsor; Elissa Goss, Executive Director, Washington Student Association.

Persons Signed In To Testify But Not Testifying (Higher Education): No one.

Staff Summary of Public Testimony (Regular Session 2017) (Ways & Means): No public hearing was held.

Persons Testifying (Ways & Means): N/A.

Persons Signed In To Testify But Not Testifying (Ways & Means): N/A.

Staff Summary of Public Testimony (Higher Education & Workforce Development): PRO: This bill passed the House unanimously and passed this committee last year. Students should be receiving 100 percent of their financial aid. Under contracts by individual institutions, there are no fee-free ATMs available and students are charged fees to access their financial aid. This is a transparency bill on the contracts and ensures that 100 percent of the financial aid refund is disbursed to the student.

Persons Testifying (Higher Education & Workforce Development): PRO: Representative Gerry Pollet, Prime Sponsor.

Persons Signed In To Testify But Not Testifying (Higher Education & Workforce Development): No one.