AB 2377, as introduced, John A. Pérez. Student loans: California Student Loan Refinancing Program.
Under existing law, the California Educational Facilities Authority Act, the California Educational Facilities Authority is, among other things, authorized to borrow money and issue bonds, notes, and other obligations. The authority is also authorized to hold or invest in student loans, create pools of student loans, and sell bonds bearing interest on a taxable or tax-exempt basis or other interests backed by the pools of student loans.
This bill would establish the California Student Loan Refinancing Program within the authority, and provide for its administration by the Treasurer’s office, with the goals of helping eligible students and graduates to refinance loan debt at favorable rates and creating a revolving fund so that additional refinancing may occur to help more students and graduates. The bill would authorize the authority to issue bonds for purposes of providing student loan refinancing options, including loan consolidation, interest rate buy-down, debt restructuring, establishing a loan loss reserve account, and alignment with various federal student loan alternative repayment programs. The bill would establish eligibility requirements for students and graduates. The bill would authorize the board of the authority to develop and adopt regulations and procedures for the implementation of the program established by the bill.
Because this bill would authorize the authority to raise and expend funds for new purposes, the bill would make an appropriation.
Vote: majority. Appropriation: yes. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
The Legislature finds and declares all of the
2following:
3(a) Over the last decade, tuition within the California higher
4education system increased 145 percent at the University of
5California and 191 percent at the California State University.
6(b) Recently, the Legislature, through the Middle Class
7Scholarship Act, has pursued efforts to lower the costs of tuition
8for prospective students, but little has been done for those who
9have already graduated and suffered the worst of the affordability
10squeeze, and have had to incur more student loan debt in order to
11achieve their college degrees.
12(c) Student loan debt
is a drag on our economy, preventing
13graduates from entering graduate schools, achieving financial
14independence, buying property, starting businesses, or otherwise
15reinvesting in the state.
16(d) In the United States today, there is more than $1.2 trillion
17in outstanding student loan debt, which works out to an average
18of more than $26,000 per graduate. These debts lead to more than
19$200,000 per graduate in lost savings and home equity, which in
20total accounts for $4 trillion in lost national wealth.
21(e) As of 2013, California residents have an average of just over
22$20,000 in student loan debt upon graduation. Of the approximately
23250,000 California residents who received bachelor’s degrees both
24in and out of the state in 2012, 52 percent had some level of student
25loan debt.
26(f) In the 1980s, the California State
Treasurer administered a
27$75 million student loan program that provided borrowers with
28access to low-interest loans through the issuance of tax-exempt
29revenue bonds. In 1995, the California Educational Facilities
30Authority (CEFA) took over administration of the loan program.
P3 1(g) The CEFA retains the bond authority for this program, and
2has the authority to use proceeds from the sale of bonds for, among
3other things, “the refinancing of existing debt.”
Article 7.5 (commencing with Section 94200) is added
5to Chapter 2 of Part 59 of Division 10 of Title 3 of the Education
6Code, to read:
7
(a) The California Student Loan Refinancing Program
11is hereby established, to be administered by the Treasurer’s office
12with policy guidance from the authority. The goals of the program
13are to help eligible students and graduates to refinance loan debt
14at favorable rates and to create a revolving fund so that additional
15refinancing may occur to help more students and graduates.
16(b) The program may use the authority’s power to issue bonds
17pursuant to Article 4 (commencing with Section 94140) for
18purposes of providing student loan refinancing options that shall
19include, but are not necessarily limited to, loan consolidation,
20interest rate buy-down, debt restructuring, establishing a loan loss
21reserve account, and alignment with various federal
student loan
22alternative repayment programs.
Eligibility for the program shall be limited to persons
24meeting all of the following requirements:
25(a) Residency in California.
26(b) Completion of a bachelor’s degree.
27(c) Employment in a public service program or by a nonprofit
28organization.
29(d) Ability to repay, as determined by the authority.
30(e) Any additional qualification imposed by the Treasurer.
The board of the authority is authorized to develop and
32adopt regulations and procedures for the implementation of this
33article, including program administration requirements and
34provisions to ensure the solvency of the financing.
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