BILL NUMBER: AB 2377 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member John A. Pérez
FEBRUARY 21, 2014
An act to add Article 7.5 (commencing with Section 94200) to
Chapter 2 of Part 59 of Division 10 of Title 3 of the Education Code,
relating to student loans, and making an appropriation therefor.
LEGISLATIVE COUNSEL'S DIGEST
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:
SECTION 1. The Legislature finds and declares all of the
following:
(a) Over the last decade, tuition within the California higher
education system increased 145 percent at the University of
California and 191 percent at the California State University.
(b) Recently, the Legislature, through the Middle Class
Scholarship Act, has pursued efforts to lower the costs of tuition
for prospective students, but little has been done for those who have
already graduated and suffered the worst of the affordability
squeeze, and have had to incur more student loan debt in order to
achieve their college degrees.
(c) Student loan debt is a drag on our economy, preventing
graduates from entering graduate schools, achieving financial
independence, buying property, starting businesses, or otherwise
reinvesting in the state.
(d) In the United States today, there is more than $1.2 trillion
in outstanding student loan debt, which works out to an average of
more than $26,000 per graduate. These debts lead to more than
$200,000 per graduate in lost savings and home equity, which in total
accounts for $4 trillion in lost national wealth.
(e) As of 2013, California residents have an average of just over
$20,000 in student loan debt upon graduation. Of the approximately
250,000 California residents who received bachelor's degrees both in
and out of the state in 2012, 52 percent had some level of student
loan debt.
(f) In the 1980s, the California State Treasurer administered a
$75 million student loan program that provided borrowers with access
to low-interest loans through the issuance of tax-exempt revenue
bonds. In 1995, the California Educational Facilities Authority
(CEFA) took over administration of the loan program.
(g) The CEFA retains the bond authority for this program, and has
the authority to use proceeds from the sale of bonds for, among other
things, "the refinancing of existing debt."
SEC. 2. Article 7.5 (commencing with Section 94200) is added to
Chapter 2 of Part 59 of Division 10 of Title 3 of the Education Code,
to read:
Article 7.5. California Student Loan Refinancing Program
94200. (a) The California Student Loan Refinancing Program is
hereby established, to be administered by the Treasurer's office with
policy guidance from the authority. The goals of the program are to
help eligible students and graduates to refinance loan debt at
favorable rates and to create a revolving fund so that additional
refinancing may occur to help more students and graduates.
(b) The program may use the authority's power to issue bonds
pursuant to Article 4 (commencing with Section 94140) for purposes of
providing student loan refinancing options that shall include, but
are not necessarily limited to, loan consolidation, interest rate
buy-down, debt restructuring, establishing a loan loss reserve
account, and alignment with various federal student loan alternative
repayment programs.
94201. Eligibility for the program shall be limited to persons
meeting all of the following requirements:
(a) Residency in California.
(b) Completion of a bachelor's degree.
(c) Employment in a public service program or by a nonprofit
organization.
(d) Ability to repay, as determined by the authority.
(e) Any additional qualification imposed by the Treasurer.
94202. The board of the authority is authorized to develop and
adopt regulations and procedures for the implementation of this
article, including program administration requirements and provisions
to ensure the solvency of the financing.