BILL NUMBER: SB 1289	AMENDED
	BILL TEXT

	AMENDED IN SENATE  APRIL 24, 2012

INTRODUCED BY   Senator Corbett

                        FEBRUARY 23, 2012

   An act to add Article 14.5 (commencing with Section 69800) to
Chapter 2 of Part 42 of Division 5 of Title 3 of the Education Code,
relating to student financial aid.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1289, as amended, Corbett. Postsecondary education: private
student loans.
   Existing law establishes the University of California, California
State University, the California Community Colleges, and independent
colleges and universities as the 4 segments of postsecondary
education in this state. Existing law establishes various student
financial aid programs for students attending all segments of
postsecondary education.
   This bill would require a public  or   ,
 private  , or independent  postsecondary educational
institution to make specified disclosures related to private student
loans in financial aid material and private loan applications
provided or made available by the institution, to distinguish private
loans from federal loans in individual financial aid awards, and,
 for any   if the institution provides a 
private loan lender list  provided by the institution
 , to provide general information on the terms of the loan
available through the lender and disclose the reason for each lender'
s inclusion on the list. The bill would apply to the University of
California only to the extent that the Regents of the University of
California act, by resolution, to make it applicable.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Article 14.5 (commencing with Section 69800) is added
to Chapter 2 of Part 42 of Division 5 of Title 3 of the Education
Code, to read:

      Article 14.5.  Private Student Loans


   69800.  A public  or   ,  private  ,
or independent  postsecondary educational institution shall do
all of the following:
   (a)  (1)    State all of the following in all
printed and online financial aid materials issued or distributed by
the institution to applicants for admission or matriculated students
and with private loan applications provided or made available by the
institution: 
   (1) 
    (A)  Private loans  are not guaranteed by the
federal government   lack flexible repayment options and
borrower protections that federal loans are required to provide
 . 
   (2) 
    (B)  Private loans may cost more than federal loans.

   (3) 
    (C)  Federal direct loans are available to students
regardless of income. 
   (2) The institution may continue to use financial aid materials
that are printed before January 1, 2013, if the institution includes
an insert with the printed material that provides the information
required in paragraph (1). All financial aid materials printed on or
after January 1, 2013, shall include the information required in
paragraph (1). 
   (b) Clearly distinguish private loans from federal loans in
individual financial aid awards by stating, for any private loans
 offered   included  by the institution as
part of the institution's award package, all of the following:

   (1) The range of interest rates that may be charged on the private
loan.  
   (2) 
    (1)  Whether the rate is fixed or variable. 
   (3) If the interest rate on the loan is variable, the frequency of
interest rate changes, the explanation for that rate change, and, if
applicable, the maximum interest rate increase.  
   (2) An explanation that private loan interest rates may be higher
than federal loan interest rates and may increase over time through
no fault of the borrower, and that there is no legal limit to the
interest rate that borrowers may be charged on private loans. 

   (4) 
    (3)  Any and all fees associated with the assumption of
the loan. 
   (5) 
    (4)  An explanation that the interest rate on a private
loan may depend on the borrower's credit rating.
   (c)  For any   If the institution provides a
 private loan lender list  provided by the institution
 ,  it also shall  provide general information on
the terms of the loan available through the lender and disclose the
reason for each lender's inclusion on the list. The institution shall
also inform the student of his or her right to choose other lenders.

   69801.  This article shall apply to the University of California
only to the extent that the Regents of the University of California
act, by resolution, to make it applicable.