Washington State

House of Representatives

Office of Program Research



Higher Education Committee

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.

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

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

Brief Summary of Bill

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

  • Requires the Washington Student Achievement Council 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.

Hearing Date: 2/7/17

Staff: Trudes Tango (786-7384).


Post secondary 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 on 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 aid payments to students. In general, the new requirements include the following:

Summary of Bill:

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

Post secondary institutions disbursing federal or state student financial aid balances by means other than direct deposit or issuing a check must:

An institution is not required to duplicate notices or disclosures or provide additional notices or disclosures on federal financial aid that would otherwise be required under federal law.

The WSAC's rules must assure that contracts between post secondary institutions and third-party servicers or financial institutions:

The WSAC must compile a list on its website of all the post secondary institutions that use third-party servicers or financial institutions.

Post secondary institution means the public institutions of higher education and any degree-granting institution, for-profit institution, or for-profit vocational institute, operating in the state and offering instruction and training beyond the high school level for gainful employment in a recognized profession.

Appropriation: None.

Fiscal Note: Available.

Effective Date: The bill takes effect 90 days after adjournment of the session in which the bill is passed.