BILL NUMBER: AB 721 ENROLLED
BILL TEXT
PASSED THE SENATE AUGUST 24, 2015
PASSED THE ASSEMBLY AUGUST 27, 2015
AMENDED IN SENATE JULY 8, 2015
AMENDED IN SENATE JUNE 24, 2015
AMENDED IN ASSEMBLY MAY 28, 2015
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, 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, except the California Community Colleges, to make
available to the public upon request and in a prominent location on
its Internet Web site within 12 months of a completed academic year,
as defined, specified student loan debt statistics on graduates. The
bill would require all public, private, and independent postsecondary
institutions to provide students information concerning unused state
and federal financial assistance including unused federal student
loan moneys available to them before 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.
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 within 12 months of a
completed academic year the following information concerning
graduates and student loan debt:
(A) 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. For purposes
of this section, "academic year" means the most recently completed
federal award year of July 1 to June 30.
(B) (i) For each type of credential specified in subparagraph (A),
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 total principal borrowed for each type of credential in
those loans described in clause (i).
(C) (i) For each type of credential specified in subparagraph (A),
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 total principal borrowed for each type of credential in
those loans described in clause (i).
(D) The average cumulative principal borrowed by those students
counted for purposes of the calculations required by subparagraphs
(B) and (C) by credential type, calculated by dividing the sum
identified in clause (ii) of each of those subparagraphs for each
type of credential by the number of that type of credential issued
for students receiving the loans described in the respective
subparagraph.
(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 certifying a borrower's eligibility for a
private student loan, a public, private, or independent postsecondary
educational institution shall provide to the student information
concerning all unused state and federal financial assistance,
including unused federal student loan moneys available to that
student.
(b) An institution that does not participate in federal student
loan programs shall inform students that the institution does not
participate in federal loan programs and that students 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 California Community Colleges may, and are requested
to, comply with the provisions of Section 69800.