BILL NUMBER: AB 721 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 13, 2015
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 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 available to the public upon request and in
a prominent location 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,
certifying their eligibility for private student 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 to the public upon request and in a
prominent location on its Internet Web site the following
information concerning graduates and student loan debt
information concerning graduates calculated and reported as follows:
debt:
(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)
(D) 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,
certifying a borrower's eligibility for 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. Except as provided in Section 69800.2, the California
Community Colleges may, and are requested to, comply with the
provisions of Section 69800.