BILL ANALYSIS Ó
SB 1210
Page 1
Date of Hearing: June 24, 2014
ASSEMBLY COMMITTEE ON HIGHER EDUCATION
Das Williams, Chair
SB 1210 (Lara) - As Amended: May 27, 2014
SENATE VOTE : 26-11
SUBJECT : Postsecondary education: California DREAM Loan
Program.
SUMMARY : Establishes the California DREAM Loan Act to provide
loans to students attending the California State University
(CSU) and the University of California (UC). Specifically, this
bill :
1)Establishes the DREAM Program to, commencing with the 2015-16
academic year provide student loans to students who meet the
following requirements:
a) Exempt from paying nonresident tuition under Education
Code §68130.5, or meets equivalent requirements;
b) Applies for financial aid using the Dream Act
application, established by the California Student Aid
Commission (CSAC);
c) Enrolled at least half time in good standing in an
instructional program at a participating institution;
d) Determined by the participating institution to have
financial need;
e) Maintains satisfactory academic progress at the
participating institution;
f) Not incarcerated or in default on any federal student
loan, state student loan, or student loan issued by CSU or
UC; and,
g) Enrolled in a program eligible for participation in the
Cal Grant Program;
2)Requires CSAC or the participating institution to require the
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student to affirm in writing that he or she satisfies the
aforementioned requirements.
3)Requires a student seeking an award to authorize CSAC to
access any information pertinent to certify that the student
meets the aforementioned requirements.
4)Requires CSAC, in collaboration with the participating
institution, to certify that the student satisfies all of the
requirements before the participating institution may issue an
award to the student pursuant to this article.
5)Provides that the amount of the DREAM loan offered to an
individual student by a participating institution shall be
determined by the institution, subject to, among others, the
following provisions:
a) The loan may not exceed the financial need of the
student;
b) No student may borrow more than $4,000 under this
program within a single academic year;
c) No student may borrow more than $20,000 in the aggregate
under the program from any one participating institution;
d) The interest rate for loans issued under the program
shall be the same as the then-current interest rate for
undergraduate loans under the William D. Ford Federal
Direct Loan Program;
e) The standard repayment term for a DREAM loan shall be 10
years. Repayment shall commence following a six-month
grace period that begins when a student graduates or ceases
to maintain at least half-time enrollment in a degree or
certificate program; and
f) Eligibility for deferment or forbearance of a DREAM loan
shall be determined by the participating institution in
accordance with the standards set forth in the William D.
Ford Federal Direct Loan Program;
6)Provides intent that, each fiscal year, funds shall be
appropriated in the annual Budget Act to participating
institutions for purposes of the DREAM Program.
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7)Provides that at the start of each academic year, before DREAM
loans for that academic year are awarded, each participating
institution shall contribute discretionary funds into its
DREAM revolving fund so that the institution's contribution of
funds equals or exceeds the following amounts:
a) Twenty-five percent of all funds for the institution's
DREAM revolving fund for the institution's first and second
year of participation;
b) Thirty-three percent of all funds in the institution's
DREAM revolving fund for the institution's third and fourth
year of participation; and,
c) Fifty percent of all funds in the institution's DREAM
revolving fund for the institution's fifth year of
participation, and every year thereafter.
8)Provides that if an institution terminates its participation
in the DREAM Program, the institution shall continue to
service DREAM loans, collect DREAM loan repayments, and
perform all due diligence required by the federal Fair Credit
Reporting Act until the last students at that institution
issued loans under the DREAM Program prior to the institution
terminating its participation have repaid their loans. An
institution that terminates its participation in the DREAM
Program, is also required to annually repay all funds provided
by the state as the institution collects DREAM loan
repayments.
9)Requires CSU and UC to annually report to the Legislature as
part of their respective annual financial aid reports the
dollar amount of each DREAM loan awarded and number of
students for whom a DREAM loan was awarded that academic year
and other specified information.
10)Requires participating institutions to establish various
processes and procedures, including those covering entrance
and exit loan counselling, loan default procedures, and fund
maintenance. Requires CSU and UC to adopt regulations
governing withholding of institutional services from students
or former students in default of their DREAM loan.
11)Provides that if a state court finds this bill, or any
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provision adopted by the UC Regents, as unlawful, the court
may order, as equitable relief, that the participating
institution subject to the lawsuit terminate all loans awarded
deemed unlawful, but no money damages, loans, or other
retroactive relief, may be awarded. Provides that the CSU and
UC are immune from the imposition of any award of money
damages, loans, or other retroactive relief.
12)Defines the various terms used in the bill to be generally
consistent with existing law.
13)Establishes findings and declarations, including, the
California DREAM Loan Act addresses barriers to federal
student loan programs for students who are eligible for
instate tuition and aid programs at California Community
Colleges (CCC), CSU, and UC and represents an important step
in the state's ongoing efforts to provide access to all
academically qualified students pursuing the dream of a
college or university degree.
EXISTING LAW :
1)Qualifies students that meet all of the following outlined
requirements for lower "resident" fee/tuition payments at the
CCC, CSU, and UC ("AB 540 Students"):
a) Is a student, other than a nonimmigrant alien within the
meaning of paragraph (15) of subsection (a) of Section 1101
of Title 8 of the United States Code;
b) Attended high school in California for three or more
years;
c) Graduated from a California high school or attainment of
equivalency;
d) Registered as an entering student at, or enrolled at, an
accredited institution of higher education in California
not earlier than the fall semester or quarter of the
2001-02 academic year; and
e) In the case of a person without lawful immigration
status, files an affidavit with the institution of higher
education stating that the student has filed an application
to legalize his or her immigration status, or will file an
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application as soon as he or she is eligible to do so.
2)Authorizes, beginning January 1, 2013, AB 540 Students to be
eligible to apply for, and participate in, any student
financial aid program administered by the State of California
to the full extent permitted by federal law. CSAC is required
to establish procedures and forms that enable AB 540 students
to apply for, and participate to the extent permitted by
federal law.
3)Provides that a student attending the CSU, the CCC, or the UC
who is exempt from paying nonresident tuition under the
provisions of AB 540 is eligible to receive a scholarship
derived from nonstate funds received, for the purpose of
scholarships, by the segment at which he or she is a student.
4)Requires the Trustees of the CSU and the Board of Governors of
the CCC, and requests the UC Regents, to establish procedures
and forms that enable AB 540 students to apply for, and
participate in, all student aid programs administered by these
segments to the full extent permitted by federal law.
FISCAL EFFECT : According to the Senate Appropriations
Committee, the cost will depend on the number of participating
CSU and UC campuses, and the number of participating students on
each campus. The state's direct contribution level is linked to
that of the campuses; the more campuses and students who
participate, the higher the direct state contribution amount in
the first year. The state share of cost decreases over time, as
the campus share increases to 50% over the first 5 years of
participation.
COMMENTS : Purpose of this bill . According to the author,
undocumented students are exempt from paying nonresident tuition
and are entitled to state and institutional financial aid, but
lack access to student loans from the federal government. As a
result, they have a "gap" in their financial aid packages of
roughly $5,000 to $6,000 at UC and $3,000 at CSU that other
students with similar financial circumstances do not have.
Unless students fill this gap by working additional hours for
pay in addition to the student contribution already required by
institutions, taking extraordinary steps to reduce their
expenses, or finding outside resources, they risk having to
withdraw from college. This bill would create the DREAM Program
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to serve UC and CSU students who meet eligibility requirements,
but lack access to federal student loans through no fault of
their own.
Program operation . Under the provisions of this bill, the Dream
Loan Program is voluntarily implemented by UC and CSU campuses.
Both the state and the individual campus would contribute to the
loan fund, with the campus matching funds beginning at 25% and
growing to 50% by the 5th year of participation. Institutions
are authorized an administrative cost allowance of 5% of the
institution's total loan funds. According to the author, once
multiple cohorts of borrowers have entered repayment, the annual
State and institutional contributions will decline and the
program will become self-supporting.
Qualifying students . This bill provides that AB 540 students
participating in the program must meet several other outlined
requirements, including applying for financial aid using the
California Dream Act application, enrolled at least half-time in
good standing in a qualifying instructional program, have
financial need, make satisfactory academic progress, and not
incarcerated or in default on a student loan.
Loan terms . Under this bill, the campus determines loan
amounts, subject to several provisions, including loan limits of
$4,000 per year and $20,000 aggregate, interest rates set at the
then-current rate for federal direct loans, repayment terms set
at 10-years, and opportunities for deferment or forbearance
determined by the institution within the standards of the
federal direct loan program.
Defaults . This bill requires CSU and UC to adopt regulations
governing student defaults. Specifically, the regulations must
provide that services (provision of grades, transcripts, and
diplomas) will be withheld until reasonable progress has been
made to repay the loan, or a justification for the delay is
determined by the institution.
Author's amendments . The author has proposed the following
amendments:
1)On page 7, line 19 to clarify that loan repayments shall be
deposited into the DREAM revolving fund and combined with
campus funds to establish the required matching funds:
SB 1210
Page 7
(d) At the start of each academic year, before DREAM loans for
that academic year are awarded, each participating institution
shall contribute discretionary funds into its DREAM revolving
fund so that the institution's contribution of funds in
combination with DREAM loan repayments equals or exceeds the
following amounts:"
2)Technical correction on page 8, line 7 to delete "Program,"
and insert "Program".
REGISTERED SUPPORT / OPPOSITION :
Support
American Civil Liberties Union of California
Associated Students of the University of California, Davis
California Catholic Conference, Inc.
California Dream Network
California Immigrant Policy Center
California State Student Association
California State University
Coalition for Humane Immigrant Rights of Los Angeles
Equality California
Hispanic Association of Colleges and Universities
Mexican American Legal Defense and Educational Fund
National Council of La Raza
Parent Institute for Quality Education
Service Employees International Union
University of California
University of California Student Association
Young Invincibles
Opposition
None on file.
Analysis Prepared by : Laura Metune / HIGHER ED. / (916)
319-3960