AB 721, as amended, 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 availablebegin insert to the public upon request and in a prominent locationend insert 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 beforebegin delete processing their private loans,end deletebegin insert certifying their eligibility for private student loans,end insert 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 69800 of the Education Code is amended
2to read:
A public, private, or independent postsecondary
4educational institution, except the California Community Colleges,
5shall do all of the following:
6(a) (1) State both of the following in all printed and online
7financial aid materials issued or distributed by the institution to
8applicants for admission or matriculated students and with private
9loan applications provided or made available by the institution:
10(A) Federal student loans are required by law to provide a range
11of flexible repayment options, including, but not limited to,
12income-based repayment and income-contingent repayment plans,
13and loan forgiveness benefits, which other
student loans are not
14required to provide.
15(B) Federal direct loans are available to students regardless of
16income.
17(2) The institution may continue to use financial aid materials
18that are printed before January 1, 2013, if the institution includes
19an insert with the printed material that provides the information
20required in paragraph (1). All financial aid materials printed on or
21after January 1, 2013, shall include the information required in
22paragraph (1).
23(b) Clearly distinguish private loans from federal loans in
24individual financial aid awards by stating, for any private loans
25included by the institution as part of the institution’s award
26package, all of the following:
27(1) Whether the rate is fixed or variable.
28(2) An explanation that private student loan lenders can offer
29variable interest rates that can increase or decrease over time,
30depending on market conditions.
31(3) An explanation that private student loans have a range of
32interest rates and fees and students should determine the interest
33rate of, and any fees associated with, the private student loan
P3 1included in their financial aid award package before accepting the
2loan.
3(4) An explanation that students should contact the lender of
4the private student loan or their postsecondary educational
5institution’s financial aid office if they have any questions about
6a
private student loan.
7(5) An explanation that the interest rate on a private loan may
8depend on the borrower’s credit rating.
9(c) If the institution provides a private loan lender list, it also
10shall provide general information about the loans available through
11the lender and disclose the basis for each lender’s inclusion on the
12list. The institution shall also disclose with the list that the student
13has the ability to choose any lender.
14(d) (1) Make availablebegin insert to the public upon request and in a
15prominent locationend insert on its Internet Web sitebegin insert
the following
16information concerning graduates andend insert student loanbegin delete debt
17information
concerning graduates calculated and reported as
18follows:end delete
19(A) Thebegin delete institution shall calculate theend delete number of students who
20started as first-time postsecondary students at the institution and
21received a certificate, associate’s degree, or bachelor’s degree
22during that academic year.
23(B) (i) Thebegin delete institution shall calculate theend delete number and percentage
24of the students identified pursuant to subparagraph (A) who
25borrowed at any time while enrolled at the institution through any
26student loan program,
including, but not necessarily limited to,
27institutional loans, state loans, federal Perkins loans, federal
28Stafford subsidized and unsubsidized loans, and private loans that
29were certified by the institution, including both federal direct
30student loans and federal family education loans.
31(ii) Thebegin delete institution shall calculate theend delete total principal borrowed
32in those loans described in clause (i).
33(C) (i) Thebegin delete institution shall calculate theend delete number and percentage
34of the students identified pursuant to subparagraph (A) who
35borrowed at any time while enrolled at the institution through a
36federal student loan program,
including, but not necessarily limited
37to, federal Perkins loans, federal Stafford subsidized and
38unsubsidized loans, federal direct student loans, and federal family
39education loans, but excluding institutional loans, state loans, and
40private loans.
P4 1(ii) Thebegin delete institution shall calculate theend delete total principal borrowed
2in those loans described in clause (i).
3(D) The institution shall report to the Student Aid Commission
4both of the following:
5(i) The percentages calculated pursuant to subparagraphs (B)
6and (C).
7(ii)
end delete
8begin insert(D)end insert The average cumulative principal borrowed by those
9students counted for purposes of the calculations required by
10subparagraphs (B) and (C), calculated by dividing the sum
11identified in clause (ii) of each of those subparagraphs by the
12number of students receiving the loans described in the respective
13subparagraph. The institution shall report average loan debt
14information for certificate, associate degree, and bachelor degree
15programs separately.
16(2) For purposes of this subdivision, “loans” shall include
17cosigned loans that financed a student’s own enrollment or
18
attendance, but shall not include parental loans.
Section 69800.2 is added to the Education Code, to
20read:
(a) Beforebegin delete processing a private student loan,end deletebegin insert certifying
22a borrower’s eligibility for a private student loan,end insert a public, private,
23or independent postsecondary educational institution shall comply
24with Section 69800, and provide to the student information
25concerning all unused federal student loan moneys available to
26that student.
27(b) An institution that does not participate in federal student
28loan programs shall, before processing a private loan, inform the
29student that the institution does not
participate in federal loan
30programs and that the student may be eligible for federal loans at
31a participating institution. The institution shall provide the student
32with information regarding the Cal Grants Web link on the
33California Student Aid Commission’s Web site and the Federal
34Student Aid Web link on the United States Department of
35Education’s Web site.
Section 69800.5 of the Education Code is amended to
37read:
Except as provided in Section 69800.2, the California
2Community Colleges may, and are requested to, comply with the
3provisions of Section 69800.
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