BILL NUMBER: AB 721	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Medina

                        FEBRUARY 25, 2015

   An act to amend Sections 69800 and 69800.5 of, and to add Section
69800.2 to, the Education Code, relating to student financial aid.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 721, as introduced, Medina. Student financial aid: private
student loans.
   Existing law requires a public, private, or independent
postsecondary educational institution, except the California
Community Colleges, 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, if the institution provides a private loan lender list, to
provide general information about the loans available through the
lender and disclose the basis for each lender's inclusion on the
list.
   This bill would require the public, private, or independent
institution to make available on its Internet Web site specified
student loan debt statistics on graduates, to provide students
information concerning unused federal student loan moneys available
to them before processing their private loans, and, if the
institution does not participate in federal student loan programs, to
inform students that they may be eligible for federal student loans
at participating institutions and provide them information regarding
Cal Grants and federal student aid. The bill would make
nonsubstantive and conforming changes.
   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.  Section 69800 of the Education Code is amended to read:

   69800.  A public, private, or independent postsecondary
educational institution, except the California Community Colleges,
shall do all of the following:
   (a) (1) State both 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:
   (A) Federal student loans are required by law to provide a range
of flexible repayment options, including, but not limited to,
income-based repayment and income-contingent repayment plans, and
loan forgiveness benefits, which other student loans are not required
to provide.
   (B) 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
included by the institution as part of the institution's award
package, all of the following:
   (1) Whether the rate is fixed or variable.
   (2) An explanation that private student loan lenders can offer
variable interest rates that can increase or decrease over time,
depending on market conditions.
   (3) An explanation that private student loans have a range of
interest rates and fees and students should determine the interest
rate of, and any fees associated with, the private student loan
included in their financial aid award package before accepting the
loan.
   (4) An explanation that students should contact the lender of the
private student loan or their postsecondary educational institution's
financial aid office if they have any questions about a private
student loan.
   (5) An explanation that the interest rate on a private loan may
depend on the borrower's credit rating.
   (c) If the institution provides a private loan lender list, it
also shall provide general information about the loans available
through the lender and disclose the basis for each lender's inclusion
on the list. The institution shall also disclose with the list that
the student has the ability to choose any lender. 
   (d) (1) Make available on its Internet Web site student loan debt
information concerning graduates calculated and reported as follows:
 
   (A) The institution shall calculate the number of students who
started as first-time postsecondary students at the institution and
received a certificate, associate's degree, or bachelor's degree
during that academic year.  
   (B) (i) The institution shall calculate the number and percentage
of the students identified pursuant to subparagraph (A) who borrowed
at any time while enrolled at the institution through any student
loan program, including, but not necessarily limited to,
institutional loans, state loans, federal Perkins loans, federal
Stafford subsidized and unsubsidized loans, and private loans that
were certified by the institution, including both federal direct
student loans and federal family education loans.  
   (ii) The institution shall calculate the total principal borrowed
in those loans described in clause (i).  
   (C) (i) The institution shall calculate the number and percentage
of the students identified pursuant to subparagraph (A) who borrowed
at any time while enrolled at the institution through a federal
student loan program, including, but not necessarily limited to,
federal Perkins loans, federal Stafford subsidized and unsubsidized
loans, federal direct student loans, and federal family education
loans, but excluding institutional loans, state loans, and private
loans.  
   (ii) The institution shall calculate the total principal borrowed
in those loans described in clause (i).  
   (D) The institution shall report to the Student Aid Commission
both of the following:  
   (i) The percentages calculated pursuant to subparagraphs (B) and
(C).  
   (ii) The average cumulative principal borrowed by those students
counted for purposes of the calculations required by subparagraphs
(B) and (C), calculated by dividing the sum identified in clause (ii)
of each of those subparagraphs by the number of students receiving
the loans described in the respective subparagraph. The institution
shall report average loan debt information for certificate, associate
degree, and bachelor degree programs separately.  
   (2) For purposes of this subdivision, "loans" shall include
cosigned loans that financed a student's own enrollment or
attendance, but shall not include parental loans.
  SEC. 2.  Section 69800.2 is added to the Education Code, to read:
   69800.2.  (a) Before processing a private student loan, a public,
private, or independent postsecondary educational institution shall
comply with Section 69800, and provide to the student information
concerning all unused federal student loan moneys available to that
student.
   (b) An institution that does not participate in federal student
loan programs shall, before processing a private loan, inform the
student that the institution does not participate in federal loan
programs and that the student may be eligible for federal loans at a
participating institution. The institution shall provide the student
with information regarding the Cal Grants Web link on the California
Student Aid Commission's Web site and the Federal Student Aid Web
link on the United States Department of Education's Web site.
  SEC. 3.  Section 69800.5 of the Education Code is amended to read:
   69800.5.   The   Except as provided in
Section 69800.2, the  California Community Colleges may, and are
requested to, comply with the provisions of  this article.
  Section 69800.