Purpose of the Bill

The bill aims to introduce regulatory standards for student banking accounts at higher education institutions in Minnesota. It seeks to ensure these accounts are consumer-friendly, particularly concerning fees and transparency, and are provided under favorable conditions.

Main Provisions

• Definitions: The bill defines critical terms relevant to its provisions, including what constitutes a higher education institution, financial institution, student banking service, Tier 1 service (used for disbursing financial aid), and Tier 2 service (any other student banking service).

• Prohibition of Fees:

  • Financial institutions cannot charge nonsufficient fund fees, overdraft fees, monthly or annual maintenance fees, or account closure fees for both Tier 1 and Tier 2 services.
  • For Tier 1 services specifically, financial institutions are also prohibited from charging deposit, withdrawal, or dormant account fees.

• Transparency Requirements: Financial institutions partnering with higher education institutions must provide students with clear, plain-language terms of service to help them understand account terms and conditions.

• Market Terms Compliance: Partner financial institutions must offer terms and conditions that are at least as favorable as those available in the broader market, including competitive interest rates.

• Reporting Requirements: By January 15 annually, higher education institutions must report specific details to the commissioner, including the number and types of student banking service accounts, financial benefits received from these accounts, identities of partner financial institutions, and a summary of the terms and conditions offered to students.

Significant Changes

• The bill introduces a new set of requirements specific to student banking services that involve transparency and protection from certain fees not previously regulated in this fashion at the state level.

• Institutions are required to align financial products offered to students with market norms, providing a standardized level of consumer protection not uniformly enforced before.

Relevant Terms

student banking accounts, higher education institutions, financial institutions, Tier 1 service, Tier 2 service, transparency, market terms, fees prohibition, reporting requirements, financial aid disbursement.