Purpose of the Bill

The bill aims to establish minimum standards for student banking accounts at higher education institutions in Minnesota. It seeks to protect students from high fees and ensure transparency in financial services offered to them through partnerships between educational institutions and financial institutions.

Main Provisions

• Definition of Terms: The bill defines key terms such as higher education institution, financial institution, and student banking service. It differentiates between Tier 1 services (used for disbursing financial aid) and Tier 2 services (not used for financial aid).

• Regulation of Partnerships: Higher education institutions cannot enter into agreements with financial institutions that offer student banking services unless these services comply with specified requirements.

• Prohibited Fees: Financial institutions are prohibited from charging nonsufficient fund fees, overdraft fees, monthly maintenance fees, annual maintenance fees, or account closure fees for both Tier 1 and Tier 2 services. Additionally, they cannot charge deposit, withdrawal, or dormant account fees on Tier 1 services.

• Transparency Requirements: Financial institutions must provide clear, plain-language terms and conditions for student banking services to ensure students understand the account details.

• Competitive Terms: Institutions must ensure that financial partners offer terms that are at least as favorable as prevailing market norms, including competitive interest rates on accounts.

• Reporting Requirements: Each year, higher education institutions must report data on student banking services to the commissioner. This includes the number of service accounts, revenue received from financial institutions, identities of partner financial institutions, and summaries of terms and conditions offered.

Significant Changes to Existing Law

This bill introduces new regulations to ensure that students are provided with fair and transparent banking services when their educational institutions partner with financial companies. It prohibits certain fees and stipulates that terms offered to students should be competitive with general market conditions.

Relevant Terms

student banking accounts, financial aid, financial institutions, higher education institutions, prohibited fees, transparency, market terms, reporting requirements